Question

Can you explain why automatic stabilizers cannot be eliminated? Please explain.

Can you explain how marginal tax rates are calculated? Please explain.

Do you believe an increase in Earned Income Credit on personal income taxes will make the middle and lower-class better-off?

Why do you suppose President Trump increased Earned Income Credit?

THANK YOU!!

Answer 1

First question is answered below

1.

Automatic stabilizers are built in mechanisms of the fiscal system which act as a cushion for the economy in times of disturbances.

They eliminate negative impact on the economy by controlling AD in times of need. For eg income tax and unemployment benefits

It is impossible to eliminate automatic stabilizers because they are much important for the economy and there will be a lot of negative impact on the economy in their absence.

Also, eliminating these stabilizers means eliminating economic support in times of need which is impossible and never adviced.