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In an aggregate demand-aggregate supply diagram what will equal decreases in government spending and taxes do?
No effect. Spending will decrease Aggregate Demand, lower taxes will raise Aggregate Demand
Does increasing taxes decrease aggregate demand?
cause of incresing and decresing the Determinants of aggregate?
An decrease in taxes shifts the aggregate demand curve to the?
right
Should you increase taxes or cut taxes?
This is a politically charged subject, so this is highly debatable. But, I will tell you it is generally more helpful to cut taxes in a recession and raise taxes in an inflationary period.The reason you want to cut taxes in a recession(or just stick with an expansionary fiscal policy) is to increase Aggregate Demand is gain a state of growth.You would want to raise taxes in an inflationary period(or just have a contradictory fiscal policy) is to decrease inflation which is probably caused by too much demand. China is a great example!
Suppose that the government reduces taxes on imported consumer goods. Use the model of aggregate demand and aggregate supply to explain what would happen to the price level and the output level of the economy in the short run?
The model of aggregate demand and aggregate supply can be used to explain what would happen to the price level and output level of the economy in the short run if the government reduces taxes on imported consumer goods. This can be illustrated with a diagram. In the diagram, the aggregate demand (AD) curve is downward sloping and the aggregate supply (AS) curve is upward sloping. The equilibrium price level is determined by the intersection of the two curves. Initially, the equilibrium price level is P1 and the equilibrium output level is Y1. When the government reduces taxes on imported consumer goods, the aggregate demand curve shifts to the right. This shift is represented by the movement from AD1 to AD2 in the diagram. The new equilibrium price level is P2, which is lower than the original price level. The new equilibrium output level is Y2, which is higher than the original output level. In summary, the reduction in taxes on imported consumer goods leads to a decrease in the price level and an increase in the output level in the short run. This is due to an increase in aggregate demand.
In an aggregate demand-aggregate supply diagram what will equal decreases in government spending and taxes do?
No effect. Spending will decrease Aggregate Demand, lower taxes will raise Aggregate Demand
Does increasing taxes decrease aggregate demand?
cause of incresing and decresing the Determinants of aggregate?
An decrease in taxes shifts the aggregate demand curve to the?
right
An increase in taxes shifts the aggregate demand curve to the?
Left
What happens to aggregate demand if government spending on infrastructure increases?
The Aggregate demand will shift to the right. this is because the output increases as well as the price level. When taxes decrease, it causes the shift. Th short run and Long run will also increase
Should you increase taxes or cut taxes?
This is a politically charged subject, so this is highly debatable. But, I will tell you it is generally more helpful to cut taxes in a recession and raise taxes in an inflationary period.The reason you want to cut taxes in a recession(or just stick with an expansionary fiscal policy) is to increase Aggregate Demand is gain a state of growth.You would want to raise taxes in an inflationary period(or just have a contradictory fiscal policy) is to decrease inflation which is probably caused by too much demand. China is a great example!
Suppose that the government reduces taxes on imported consumer goods. Use the model of aggregate demand and aggregate supply to explain what would happen to the price level and the output level of the economy in the short run?
The model of aggregate demand and aggregate supply can be used to explain what would happen to the price level and output level of the economy in the short run if the government reduces taxes on imported consumer goods. This can be illustrated with a diagram. In the diagram, the aggregate demand (AD) curve is downward sloping and the aggregate supply (AS) curve is upward sloping. The equilibrium price level is determined by the intersection of the two curves. Initially, the equilibrium price level is P1 and the equilibrium output level is Y1. When the government reduces taxes on imported consumer goods, the aggregate demand curve shifts to the right. This shift is represented by the movement from AD1 to AD2 in the diagram. The new equilibrium price level is P2, which is lower than the original price level. The new equilibrium output level is Y2, which is higher than the original output level. In summary, the reduction in taxes on imported consumer goods leads to a decrease in the price level and an increase in the output level in the short run. This is due to an increase in aggregate demand.
Why would a tax cut would shift the aggregate demand curve outward showing an increase in aggregate demand?
Personal taxation is a amount taken by the Government or State from an individuals income. A cut in taxes would mean that people effectively have more income, therefore more income can be spent on goods and services. This ability for consumers to spend more means that they will demand more, shifting the aggregate demand curve to the right. It is the same in a business sense. If there was to be tax cuts for businesses, businesses have the ability to spend more in turn increasing aggregate demand. ~MB
A decrease in net taxes will?
Raise aggregate expenditure by raising disposable income, thereby increasing consumption.
Shift in the aggregate demand curve?
Remember that aggregate demand is composed of consumer spending, investment spending, government spending, and net export spending. Many things affect consumer spending. The main things are consumer wealth, consumer expectations, household indebtedness, and taxes. The wealthier the consumers, the more they will spend. The higher the consumer's expectations are, the more they will spend. The lower the consumer's indebtedness, the more they will spend. The lower their taxes are, the more they will spend. If consumer spending increases, the aggregate demand curve will shift to the right. As for investment spendings: interest rates and expected returns affect this variable. As interest rates decrease, there will be more investments made. The higher a business's expected return is, the more they will invest. If more investments are being made, the aggregate demand curve will shift to the right. Change in government spending is pretty self explanatory. The more government decides to spend, the more aggregate demand will increase and therefore, shift to the right. For net expert spendings, a rising national income would mean more US exports. Moreover, a depreciation of the dollar causes more US exports. The more net exports there are, the more aggregate demand will increase and therefore, shift to the right.
Why does an increase in autonomous taxes have the same effect on equilibrium output as does an decrease in autonomous transfers?
taxes indirectly decrease Y, it does this by decreasing consumption
What are governments monetary policy options for ending severe demand pull inflation?
demand pull inflation is caused by increase in the income of of individuals, ie if aggregate demand exceeds aggregate supply, whichl leads to an increase in thear purchasing power. therefore, t he government can use the taxation pollicy to combat the demand pull inflation by using the budget for surplus where she will receive more from the individuals in the form taxes, this will reduce the amount of money from individualsw whichthey would have spent and this will help to reduce their purchasing power, as this consequently reduce or cure demand pull in inflation
