Question

Compare the impact to the economy of providing a tax cut to the wealthy versus the...

Compare the impact to the economy of providing a tax cut to the wealthy versus the poor. That is, how does a targeted tax cut impact the economy in the short run versus the long run.

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1. Suppose that the economy begins at potential output. Now, there is a tax cut. a....
1. Suppose that the economy begins at potential output. Now, there is a tax cut. a. Use the Keynesian Cross diagram to show the effect, if any, of the tax cut on output in the short run. b. Explain how the economy returns to potential output. Be sure to describe what happens to inflation and the real interest rate as the economy returns to potential. c. What effect, if any, will the tax cut have on the long-run real interest...
If a tax cut does not impact the economy’s ability to produce, it will nonetheless tend...
If a tax cut does not impact the economy’s ability to produce, it will nonetheless tend to have some effects. Present an analysis of how a tax cut will impact the economy using the tools presented in class (i.e., a labor market, the IS-LM framework, and an AS-AD diagram) and the Classical perspective. In particular, predict the impacts on employment, the nominal wage level, the real wage level, the output level, the price level, and the real interest rate level.
The Republican tax cut has been in the news. The tax cut which, on net, is...
The Republican tax cut has been in the news. The tax cut which, on net, is set to increase the deficit by $1.5 trillion over the next ten years is the focus of this question. A) One important thing to keep in mind is that the economy is already essentially at potential with unemployment at 4.1%. Assume that the economy is in long run equilibrium before the tax cut. What will happen to the US economy in the short run?...
Suppose in an economy exports are increased. Describe in detail the impact of this on on...
Suppose in an economy exports are increased. Describe in detail the impact of this on on the equilibrium output and inflation in the AD-AS model, including with graphs. Make sure to make a difference between the short-run and the long-run equilibrium. Would this affect the potential output? How/why/why not?
The government decides to cut income taxes to combat a potential recession. If the economy was...
The government decides to cut income taxes to combat a potential recession. If the economy was initially in long-run equilibrium, this reduction in taxes will lead the price level to____ in the short run and ___ in the long run. a.) fall; fall further b.) fall; rise back towards its initial position c.) rise; rise further d.) rise; fall back towards its initial position. Please explain your reasoning.
How is an increase in savings a boost to the economy in the long run? How...
How is an increase in savings a boost to the economy in the long run? How can more saving have a negative impact on the economy in the short run?
Decide in each case whether the impact of the government on the economy increases or decreases...
Decide in each case whether the impact of the government on the economy increases or decreases and why. How does your answer compare to that given by standard measures of the size of government? Only short answers required. a. Provincial governments subsidize day-care centres with parents paying $5 in user fees a day. b. Provincial governments open government-run day-care centres. c. The Federal budget is brought into balance by reducing grants to provincial governments.
What is the impact on current consumption of a temporary tax cut according to: a. the...
What is the impact on current consumption of a temporary tax cut according to: a. the Keynesian consumption function? b. the permanent-income hypothesis?
Think about a small open economy. Its government announces that they will have a tax cut...
Think about a small open economy. Its government announces that they will have a tax cut of $200 million this year, and there will be a tax increase of $210 million next year, when the interest rate is 5%. Question: If Ricardian equivalence does not hold, what are the effects of this change (tax cut and subsequent tax increase) on a. the world real interest rate, b. national saving, investment, and c. the current account balance in equilibrium?
Consider an economy that is initially in equilibrium. The government, in order to boost the economy,...
Consider an economy that is initially in equilibrium. The government, in order to boost the economy, increases government purchases and fully finances this increase by levying a lump-sum tax on households. Suppose that there is no income effects in labor supply. How does this policy affect the economy a. In the long run and according to the classical view, real GDP increases. b. In the short-run and according to the Keynesian view, real GDP decreases. c. In the short-run and...