Why tax cuts can increase both aggregate demand and aggregate supply?

Q: What is fiscal policy? And what are the different views on it from political platforms?

A: In economics, the term fiscal policy refers to the method by which a nation’s government adjust…

Q: Name the demand side policy that has tax and government spending as it's main instruments

A: Governments use taxes in their policy in such a way that it generates government revenues which…

Q: What is the tax policy?

A: Hello. Since you have posted multiple questions and not specified which question needs to be solved,…

Q: Differentiate between the following terms. Expansionary fiscal policy and expansionary monetary…

A: Expansionary fiscal policy is the policy which focuses on increasing aggregate demand by increasing…

Q: How would an increase in income tax influence the aggregate demand and the aggregate supply in the…

A: Aggregate demand: Aggregate demand, or final domestic demand, is the total demand for final goods…

Q: What are the implications of the current fiscal stimulus and low interest on the future of our…

A: A stimulus package is defined as a coordinated measure by the government to lift the economy out of…

Q: What is the reason why fiscal policy should be in tune with monetary policy when the economy is in…

A: Fiscal policy can be defined as government policies and the spending pattern that the government…

Q: What would happen if contractionary fiscal policy were implemented during an economic boom but,due…

A: The fiscal policy is a policy of the government which includes instruments namely taxes, government…

Q: Based on your understanding of the multiplier effect and the crowding-out effects, do you think that…

A: The macroeconomic equilbrium in an economy occurs at the point where the aggregate demand in the…

Q: what is the concept of fiscal policy?

A: Government is a unit or a group of people who runs the economy. This unit collectively makes various…

Q: Based on the Krugman text and your reader articles, what position do you take on the current fiscal…

A: Based on economic theory and empirical evidence, there are arguments for both stimulus and austerity…

Q: If stability of the economy is the primary objective of Fiscal Policy, then an Annually Balanced…

A: An annual balanced budget refers to when the spending of the government during a fiscal year equals…

Q: Under what conditions is expansionary fiscal policy the most effective at increasing output? Why?

A: Expansionary fiscal policy is the policy which is to be used to push back the equilibrium normal…

Q: Which of the following is a tool of fiscal policy used to increase aggregate demand in an economy?…

A: One fiscal policy measure that can boost aggregate demand is tax reductions. Tax reductions increase…

Q: a) How can the government use fiscal policy during a downturn to stimulate the economy?

A: Fiscal policy is the use of government tax collection and expenditure to impact the economy of a…

Q: can Social Security and Medicare be fiscal time bombs

A: Social security is an initiative by Federal government which provides sources of income to people…

Q: Does MPC matter when using taxes to stimulate the economy in the short-run?

A: The stimulation of the economy using taxes involves fiscal policy. The expansionary/contractionary…

Q: Describe the shortcomings of Fiscal Policy. Be as thorough as possible.

A: Fiscal policy is the one where government changes its spending and tax policies in order to achieve…

Q: Right now many economies in the world are experiencing a downturn due to the Corona Virus. a) What…

A: Hello, thank you for the question. Since there are multiple subpart questions posted here, only the…

Q: Discuss two reasons why discretionary fiscal policy (expansionary & contractionary) may be…

A: Contractionary fiscal policy:- When the government either slashes expenditure or hikes taxes, it is…

Q: If the government were to increase income taxes, how would that affect output (RGDP) and the price…

A: Similarly, contractionary fiscal policy,  dampens the output level in the short run. It shifts the…

Q: What is the Effects of Fiscal Policy on Real GDP and the Price Level?

A: Fiscal policy refers to a government's approach to influencing the state of the economy through…

Q: What are the reasons of fiscal policy not being effective in an economy according to classical…

A: The classical theory focuses on free markets and that the markets will regulate themselves when they…

Q: From a political economy perspective, why does fiscal policy have a built-in expansionary bias?

A: Fiscal policy refers to the use of government spending and taxation to influence the economy. It…

Q: Define the budget deficit

A: A budget is a financial document of the economy. This includes the expected revenue of the…

Q: What is the Laffer curve. Graphically show how to increase the tax revenue.

A: The economies around the world tend to operate with the motive of increasing their growth, and…

Q: What are the two things Congress could manipulate to enact Discretionary Fiscal Policy?

A: Congress is the legislative branch of Federal Government.  Fiscal Policy refers to change in…

Q: How did John Maynard Keynes economic theory influence the 20th Century fiscal policy?

A: Fiscal policy: - it is a tool of the government of a country in which the government adjusts its…

Q: Why is identifying potential opportunities, and managing within predictable limits for fiscal policy…

A: Fiscal policy is an important tool for dealing with the economy on account of its capacity to…

Q: List what specific, deliberate actions the federal government could take to enact expansionary…

A: Expansionary fiscal policy is aimed at increasing aggregate demand when the economy is in a…

Fiscal Policy and Money Market

Fiscal policy is one of the important tools that is used by the government to control inflation or aggregate demand in the economy. Under this policy, there are two rules which are used by the government, one is the expenditure of the government and the other is the taxation or income of the government which it collects from the public.