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tax rate
tax rate

... 1. proportional or flat tax a tax imposed so that the tax rate is fixed. The amount of the tax is in proportion to the amount subject to taxation. "Proportional" describes a distribution effect on income or expenditure, referring to the way the rate remains consistent (does not progress from "low to ...
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... There is no evidence of asymmetry Response of Expenditure to Output Gaps Dependent Variable: Primary expenditure to GDP ...
1999 AP Macroeconomics Scoring Guidelines - AP Central
1999 AP Macroeconomics Scoring Guidelines - AP Central

... interest, higher interest rates will reduce investment. With higher interest rates, firms will not undertake certain investment projects. Higher interest rates will attract capital from abroad into this country. The flow of funds increases the demand for the country's currency and leads to an apprec ...
14.41 Fall 2004 Mock Final—Solutions  T/F/U
14.41 Fall 2004 Mock Final—Solutions T/F/U

... taking penicillin when ill, so we may want to subsidize penicillin instead of taxing it. ...
The Concept of Income
The Concept of Income

... • If wages grow at rate w, then the price index of output grows at rate w- (1-q)g and real wages grow at rate (1-q)g • The share of real hip replacements in real GDP declines asymptotically to zero • But the contribution of each economic activity (public and private activities) to welfare is better ...
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Ch 15

... – When consumer expectations of future improve, consumer purchases go up – Government policies to reduce personal income taxes will serve to increase consumer incomes because what is left after paying taxes will be higher – Government policies that increase government income transfers will increase ...
Implications of Fiscal Austerity for U.S. Monetary Policy
Implications of Fiscal Austerity for U.S. Monetary Policy

... Implications of Fiscal Austerity…Continued  Long-term budget sustainability is critical, but timing is important  While fiscal policy is only one consideration, more restrictive near-term fiscal policy will delay when we achieve the Fed’s dual mandate – currently the unemployment rate is 7.5 perc ...
Comment by Jonas Agell - Government Offices of Sweden
Comment by Jonas Agell - Government Offices of Sweden

... downward revisions of potential GDP growth, rather than changes in tax-transfer laws. The ambiguities surrounding the measurement of discretionary policy action imply that the econometrician will have a hard time finding truly exogenous right-hand side variables in a consumption regression. It is no ...
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... 5. The experience of Ireland during the last several decades indicates that high rates of economic growth are unlikely to be achieved and sustained unless a. tariffs and other trade barriers restrain the inflow of goods from low-wage countries. b. sound policies including those supportive of rule of ...
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The Current Account, Fiscal Policy and Medium Run Income

... The deficits link would be further complicated if residents perceive income tax changes as temporary rather than permanent influences on their disposable income. For instance, if an income tax rise that lowered the budget deficit was seen as temporary and households maintained pre tax rise consumpti ...
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... Effects of monetary policy on economy The federal budget deficit The national debt Fiscal policy options ...
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... 1) Fall of Soviet Union 2) Rise of Technology This combination has made it possible for the world to become one global Economy: •The Fall of the Soviet Union meant the end to a purely communist Economic system. •The rise of Technology meant it was now possible for information to be shared around the ...
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Effects of Fiscal and Monetary Policy in the Great Recession

... Great Recession (IMF, 2013, [8]). Three conclusions should be pointed out. Firstly, the crisis has provided evidence that fiscal policy is an appropriate countercyclical policy tool under some circumstances. Secondly, countercyclical fiscal policies could be more effective and the most appropriate p ...
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... uncertainty in global markets. Last Friday (June 24), the People’s Bank of China issued a short statement noting that it had measures in place to deal with a possible Brexit shock to the markets. It is expected that the short-term negative effects of Brexit to China will be smaller than for other la ...
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... • Changes in aggregate supply or demand lead to new levels of GDP and prices • Increase in consumption expenditure (C), business investment (I), net exports (XN) or government spending (G) increase aggregate demand • When GDP or price levels are not at their desired levels, macroeconomic monetary or ...
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... following a recovery in 2012. In a welcome development, credit to the private sector increased by 2.5%, continuing the growth from 2012. However, this was outweighed by a sharp fall (77.9%) in credit to the public sector. Commercial bank credit continues to favour non-tradable activities such as rea ...
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... along with an increase in Personal Consumption Expenditures (PCE) of 1.3% in December. Economic indicators such as these are tracked closely by the Federal Reserve for signs of improvements in the overall economy, which may lead the Federal Reserve to raise rates faster than anticipated. Many econom ...
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Chap009 - Zietlow, John

... • The forces of aggregate demand and aggregate supply confront each other in the marketplace to determine macro equilibrium • Equilibrium (macro): The combination of price level and real output that is compatible with both aggregate demand and aggregate ...
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ECON 102 Tutorial 3

... The first thing to note here is that only two components change with income: imports and private consumption. This means that as output/income (Y) changes there is an ’induced’ change in C and M. The other types of expenditure have no induced component (ie they are autonomous). To calculate the MP t ...
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Fiscal multiplier

In economics, the fiscal multiplier (not to be confused with monetary multiplier) is the ratio of a change in national income to the change in government spending that causes it. More generally, the exogenous spending multiplier is the ratio of a change in national income to any autonomous change in spending (private investment spending, consumer spending, government spending, or spending by foreigners on the country's exports) that causes it. When this multiplier exceeds one, the enhanced effect on national income is called the multiplier effect. The mechanism that can give rise to a multiplier effect is that an initial incremental amount of spending can lead to increased consumption spending, increasing income further and hence further increasing consumption, etc., resulting in an overall increase in national income greater than the initial incremental amount of spending. In other words, an initial change in aggregate demand may cause a change in aggregate output (and hence the aggregate income that it generates) that is a multiple of the initial change.The existence of a multiplier effect was initially proposed by Keynes student Richard Kahn in 1930 and published in 1931. Some other schools of economic thought reject or downplay the importance of multiplier effects, particularly in terms of the long run. The multiplier effect has been used as an argument for the efficacy of government spending or taxation relief to stimulate aggregate demand.In certain cases multiplier values less than one have been empirically measured (an example is sports stadiums), suggesting that certain types of government spending crowd out private investment or consumer spending that would have otherwise taken place. This crowding out can occur because the initial increase in spending may cause an increase in interest rates or in the price level. In 2009, The Economist magazine noted ""economists are in fact deeply divided about how well, or indeed whether, such stimulus works"", partly because of a lack of empirical data from non-military based stimulus. New evidence came from the American Recovery and Reinvestment Act of 2009, whose benefits were projected based on fiscal multipliers and which was in fact followed - from 2010 to 2012 - by a slowing of job loss and private sector job growth.
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