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Taxpayers may reduce their savings to pay the tax while maintaining their present consumption if there was a tax increase, but the opposite is true if there is a tax decrease.

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Related Questions

What does fiscal policy include?

changes in government spending and taxation


Instruments of fiscal policy?

changes in the composition of taxation and government spending


Why does it take so long to put fiscal changes into effect?

Fiscal policy affects the economy by changing incentives. Taxing an activity tends to discourage that activity.


What do the balances of temporary accounts show?

changes in the owners capital for a single fiscal period


How do you make a sentence using the word retroactive?

These changes are retroactive to the beginning of the fiscal year.


What does Contractionary fiscal policy includes?

Contractionary fiscal policy occurs when government spending is lower than tax. Governments can use a budget surplus to do two things. One main instrument of fiscal policy are changes in the levels and composition of tax.


What are the Reasons for fall in money value?

Changes in fiscal policy Inflation rate Interest rate


The response of businesses and individuals to fiscal policy changes is related to which of these?

the amount of funds government is spending


Why does a business need to be consistent in the fiscal period it uses for its financial reports?

A business needs to be consistent in the fiscal period it uses for financial reports for purposes of comparison and accuracy. If the fiscal period changes, then it is difficult to compare the business's performance across different periods.


What is a fiscal implication?

A fiscal implication refers to the financial consequences or effects that a particular policy, decision, or event has on government budgets, revenues, and expenditures. It can involve changes in taxation, spending, or borrowing that impact the overall fiscal health of a government. Understanding fiscal implications is crucial for policymakers as they assess the sustainability and effectiveness of their financial strategies.


What does fiscal mean?

Fiscal usually relates to matters of financial stature. Fiscal could also relate to taxes and government issues. The use of the word fiscal can be combined in conjunction with fiscal cliff, fiscal year, fiscal deficit, fiscal policy and fiscal parish.


Some economists say it takes too long for changes in taxes or government spending to be put in effect and when the changes do occur there is no strong evidence that they work?

This is known as the problem of time lags in fiscal policy. The delays in implementing changes can make it difficult to achieve desired economic outcomes in a timely manner. Additionally, the effectiveness of fiscal policy depends on various factors, making it challenging to directly attribute changes in economic conditions solely to changes in taxes or government spending.