What is supply-side economics, and how does it differ from the Keynesian emphasis on fiscal policy?
Supply-side economics focuses on reductions in marginal tax rates and the incentives those reductions can create. Lower marginal tax rates increase the relative attractiveness of productive activity and can stimulate output. In contrast, standard Keynesian theory focuses on how demand stimulus can increase output.
Economics
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The CPI and an Individual's Cost of Living
Read: "The Consumer Price Index--Why the Published Averages Don't Always Match An Individual's Inflation Experience."
Questions:
- Why does the mix of goods that you buy determine how well the CPI explains the effect of inflation on the purchasing power of your income?
- Why does geographical location have an effect on how well the CPI measures changes in your cost of living?
- Suppose that the price of heating oil rises at twice the rate of inflation. For which portions of the country would the CPI overstate the effect of inflation? For which portions of the country would the effect of inflation be understated?
Economics
In the area of taxation, the trade-off between equity and efficiency
a. never occurs since efficient taxes are often the most progressive. b. is relevant as efficient taxes are often regressive. c. is irrelevant. d. is relevant because efficient taxes are often progressive.
Economics