Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

According to the supply-side view of fiscal policy, if the impact on total tax revenues is the same, does it make any difference wether the

According to the supply-side view of fiscal policy, if the impact on total tax revenues is the same, does it make any difference wether the government cuts taxes by either reducing marginal tax rates or increasing the personal exemption allowance?

No, both methods of cutting taxes will exert the same impact on aggregate supply??

No, people in both cases will increase their saving, expecting higher future taxes, and thereby offset the stimulus effect of lower current taxes.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting Creating Value in a Dynamic Business Environment

Authors: Ronald Hilton, David Platt

10th edition

78025664, 978-0078025662

Students also viewed these Finance questions