"As the saying goes, the only sure things in life are death and taxes. This saying points out the result that everything having to do with taxes is an automatic fiscal policy." Is the preceding analysis correct or incorrect? Explain your answer
What will be an ideal response?
The analysis is incorrect because whenever Congress changes the tax law, it is a discretionary fiscal policy. For instance, if Congress passes a tax cut, the change in taxes is a discretionary fiscal policy. However, for any given set of tax laws, a change in the state of the economy will automatically change the tax revenues and so for a given set of tax laws, tax revenue do operate as an automatic fiscal policy.
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In the United States, the inflation rate since 1999 generally was
A) lower than between 1979 to 1981. B) higher than between 1979 to 1981. C) higher than in the 1980s. D) much higher than between 1985 to 1995. E) negative.
What are the key differences between how we illustrate a contractionary fiscal policy in the basic aggregate demand and aggregate supply model and in the dynamic aggregate demand and aggregate supply model?
. What will be an ideal response?