Identify the role imposing a tax in an economy.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 12, Problem 1.1P

To determine

Identify the role imposing a tax in an economy.

Expert Solution & Answer

Explanation of Solution

When the tax is imposed by the government on an economy, it will reduce the disposable income of the people. When the income falls, people will reduce the consumption. As a result, the overall aggregative demand in an economy will tend to fall. It causes to reduce the employment opportunities and output in an economy. In short, when the tax is imposed on the economy, it will reduce the national output.

If the GDP decreases due to the imposition of tax on an economy, then the investment level will also show a declining trend. The decline in the rate of interest with expansionary fiscal policy can stimulate this problem.

Economics Concept Introduction

Concept introduction:

Tax: The tax is a compulsory and unilateral payment made by the people towards the government which acts as the major source of revenue to the government. There are different types of taxes such as the income tax, property tax, professional tax, and so on.

Disposable income: Disposable income refers to the amount remaining after paying all the necessary tax.

Expansionary fiscal policy: It is a form of fiscal policy that involves either decreasing taxes or increasing government expenditures, or both, in order to fight recessionary pressures.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

The financial system in Jamaica has been the subject of much attention since the news broke of the alleged fraud at Stocks and Securities Limited (SSL). The governor of the Bank of Jamaica (BOJ) has been fielding calls from concerned investors, international financial institutions, and even other regional regulators concerning the impact of this situation and the negative media reporting would have on the stability of the financial system in Jamaica and the Caribbean region.The governor would like to preserve confidence in the financial markets and institutions and has decided to embark on a series of educational “road-shows” where he will address targeted stakeholders such as the American Chamber of Commerce (AMCHAM), investor groups and the media.In this regard, the governor has assigned your team of senior professionals employed at the Bank of Jamaica to prepare a presentation slide deck for his address. Give an overview of the structure of the Jamaica financial systemThe role of…

The mandate of the South African Reserve Bank (SARB) states that “the Reserve Bank is required to achieve and maintain price stability in the interest of balanced and sustainable economic growth in South Africa”. There are several macroeconomic determinants that in many ways affect the outlook of the economy, such as inflation, growth, interest rates, unemployment and exchange rates. There has been an ongoing conversation among economists and politicians about the mandate of the SARB. Do you think that the mandate of the SARB should change? Support your view.

The central bank decided to raise interest rates when it wanted to reduce aggregate demand to fight inflation. How does an increase in interest rates reduce aggregate demand?

Answer 2

Question

Chapter 12, Problem 1.1P

To determine

Identify the role imposing a tax in an economy.

Expert Solution & Answer

Explanation of Solution

When the tax is imposed by the government on an economy, it will reduce the disposable income of the people. When the income falls, people will reduce the consumption. As a result, the overall aggregative demand in an economy will tend to fall. It causes to reduce the employment opportunities and output in an economy. In short, when the tax is imposed on the economy, it will reduce the national output.

If the GDP decreases due to the imposition of tax on an economy, then the investment level will also show a declining trend. The decline in the rate of interest with expansionary fiscal policy can stimulate this problem.

Economics Concept Introduction

Concept introduction:

Tax: The tax is a compulsory and unilateral payment made by the people towards the government which acts as the major source of revenue to the government. There are different types of taxes such as the income tax, property tax, professional tax, and so on.

Disposable income: Disposable income refers to the amount remaining after paying all the necessary tax.

Expansionary fiscal policy: It is a form of fiscal policy that involves either decreasing taxes or increasing government expenditures, or both, in order to fight recessionary pressures.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 12, Problem 1.1P

To determine

Identify the role imposing a tax in an economy.

Expert Solution & Answer

Explanation of Solution

When the tax is imposed by the government on an economy, it will reduce the disposable income of the people. When the income falls, people will reduce the consumption. As a result, the overall aggregative demand in an economy will tend to fall. It causes to reduce the employment opportunities and output in an economy. In short, when the tax is imposed on the economy, it will reduce the national output.

If the GDP decreases due to the imposition of tax on an economy, then the investment level will also show a declining trend. The decline in the rate of interest with expansionary fiscal policy can stimulate this problem.

Economics Concept Introduction

Concept introduction:

Tax: The tax is a compulsory and unilateral payment made by the people towards the government which acts as the major source of revenue to the government. There are different types of taxes such as the income tax, property tax, professional tax, and so on.

Disposable income: Disposable income refers to the amount remaining after paying all the necessary tax.

Expansionary fiscal policy: It is a form of fiscal policy that involves either decreasing taxes or increasing government expenditures, or both, in order to fight recessionary pressures.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 12, Problem 1.1P

To determine

Identify the role imposing a tax in an economy.

Expert Solution & Answer

Explanation of Solution

When the tax is imposed by the government on an economy, it will reduce the disposable income of the people. When the income falls, people will reduce the consumption. As a result, the overall aggregative demand in an economy will tend to fall. It causes to reduce the employment opportunities and output in an economy. In short, when the tax is imposed on the economy, it will reduce the national output.

If the GDP decreases due to the imposition of tax on an economy, then the investment level will also show a declining trend. The decline in the rate of interest with expansionary fiscal policy can stimulate this problem.

Economics Concept Introduction

Concept introduction:

Tax: The tax is a compulsory and unilateral payment made by the people towards the government which acts as the major source of revenue to the government. There are different types of taxes such as the income tax, property tax, professional tax, and so on.

Disposable income: Disposable income refers to the amount remaining after paying all the necessary tax.

Expansionary fiscal policy: It is a form of fiscal policy that involves either decreasing taxes or increasing government expenditures, or both, in order to fight recessionary pressures.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 12, Problem 1.1P

To determine

Identify the role imposing a tax in an economy.

Expert Solution & Answer

Explanation of Solution

When the tax is imposed by the government on an economy, it will reduce the disposable income of the people. When the income falls, people will reduce the consumption. As a result, the overall aggregative demand in an economy will tend to fall. It causes to reduce the employment opportunities and output in an economy. In short, when the tax is imposed on the economy, it will reduce the national output.

If the GDP decreases due to the imposition of tax on an economy, then the investment level will also show a declining trend. The decline in the rate of interest with expansionary fiscal policy can stimulate this problem.

Economics Concept Introduction

Concept introduction:

Tax: The tax is a compulsory and unilateral payment made by the people towards the government which acts as the major source of revenue to the government. There are different types of taxes such as the income tax, property tax, professional tax, and so on.

Disposable income: Disposable income refers to the amount remaining after paying all the necessary tax.

Expansionary fiscal policy: It is a form of fiscal policy that involves either decreasing taxes or increasing government expenditures, or both, in order to fight recessionary pressures.

Answer 6

Chapter 12, Problem 1.1P

To determine

Identify the role imposing a tax in an economy.

Expert Solution & Answer

Explanation of Solution

When the tax is imposed by the government on an economy, it will reduce the disposable income of the people. When the income falls, people will reduce the consumption. As a result, the overall aggregative demand in an economy will tend to fall. It causes to reduce the employment opportunities and output in an economy. In short, when the tax is imposed on the economy, it will reduce the national output.

If the GDP decreases due to the imposition of tax on an economy, then the investment level will also show a declining trend. The decline in the rate of interest with expansionary fiscal policy can stimulate this problem.

Economics Concept Introduction

Concept introduction:

Tax: The tax is a compulsory and unilateral payment made by the people towards the government which acts as the major source of revenue to the government. There are different types of taxes such as the income tax, property tax, professional tax, and so on.

Disposable income: Disposable income refers to the amount remaining after paying all the necessary tax.

Expansionary fiscal policy: It is a form of fiscal policy that involves either decreasing taxes or increasing government expenditures, or both, in order to fight recessionary pressures.

Answer 7

Chapter 12, Problem 1.1P

To determine

Identify the role imposing a tax in an economy.

Answer 8

Expert Solution & Answer

Explanation of Solution

When the tax is imposed by the government on an economy, it will reduce the disposable income of the people. When the income falls, people will reduce the consumption. As a result, the overall aggregative demand in an economy will tend to fall. It causes to reduce the employment opportunities and output in an economy. In short, when the tax is imposed on the economy, it will reduce the national output.

If the GDP decreases due to the imposition of tax on an economy, then the investment level will also show a declining trend. The decline in the rate of interest with expansionary fiscal policy can stimulate this problem.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Economics Concept Introduction

Concept introduction:

Tax: The tax is a compulsory and unilateral payment made by the people towards the government which acts as the major source of revenue to the government. There are different types of taxes such as the income tax, property tax, professional tax, and so on.

Disposable income: Disposable income refers to the amount remaining after paying all the necessary tax.

Expansionary fiscal policy: It is a form of fiscal policy that involves either decreasing taxes or increasing government expenditures, or both, in order to fight recessionary pressures.

Answer 12

Ch. 12 - Prob. 1.1P Ch. 12 - Prob. 1.2P Ch. 12 - Prob. 2.1P Ch. 12 - Prob. 2.2P Ch. 12 - Prob. 2.3P Ch. 12 - Prob. 2.4P Ch. 12 - Prob. 2.5P Ch. 12 - Prob. 2.6P Ch. 12 - Prob. 2.7P Ch. 12 - Prob. 2.8P

Identify the role imposing a tax in an economy.

Identify the role imposing a tax in an economy.

Explanation of Solution

Want to see more full solutions like this?

Chapter 12 Solutions