Increasing taxes to reduce national debt is more damaging to the economy than spending reforms because Tax hikes are much easier to implement and more successful at reducing debt in the long-run but lead to crowding-in, lower debt to GDP ratio, less small business formation hurting economic growth and reducing tax revenue through the Laffer curve effect.Tax hikes harm economic recovery slowing growth, reducing GDP by more than the tax revenue gained, while increasing unemployment and the need for more government spending, and thus are self-defeating.Tax hikes shift aggregate demand and aggregate supply left, but spending reforms do not.4. All of the answers are correct.

Answer is number 2 i.e. Tax hikes harm economic recovery slowing growth, reducing GDP by more than…

Answered: Increasing taxes to reduce national…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Increasing taxes to reduce national debt is more damaging to the economy than spending reforms because

Tax hikes are much easier to implement and more successful at reducing debt in the long-run but lead to crowding-in, lower debt to GDP ratio, less small business formation hurting economic growth and reducing tax revenue through the Laffer curve effect.
Tax hikes harm economic recovery slowing growth, reducing GDP by more than the tax revenue gained, while increasing unemployment and the need for more government spending, and thus are self-defeating.
Tax hikes shift aggregate demand and aggregate supply left, but spending reforms do not.

4. All of the answers are correct.

Definition Definition Increase in the amount of goods and services produced by a country in a given period of time compared to an earlier period. Economic growth is generally coupled with a rise in national income or the purchasing power of individuals. It is often measured in terms of the increase in a country's gross domestic product (GDP), or the overall monetary value of all the complete or final services and goods that a country can produce within its domestic boundaries in a specific period.

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