Chapter 2.4, Problem 2R

To determine

To Discuss: Major steps in development of socialism:

Explanation of Solution

Steps In development of socialism:

  

1. Government Spending: Government spending helps and plays an important role in social development, as the government spends under various sectors, as these sectors include the employment sector. As the employment rates increase it leads to more job facility and will result in increased under the literacy rate and thus increases the GDP as the government also spends under industrialization for economic growth.
2. Underground Economies Rise: Under this, the main reason for economies rise is to consider as a sudden increase in tax rates for individuals, as they evade the tax and thus the government increases the tax rates, and thus it will lead to price rises in the economy and the abnormal rise in prices leads to inflation rates and thus these leads to the economic rise.
3. Deficits: The term deficit happens when there occurs the situation of the downfall of money under the economy, so as to compensate this downfall of the economy, the government takes measures like making of the product in the country and thus it leads to the huge circular flow of money and government also helps in making money.
4. Massive Tax System That Reduces Incentives: The increase in the level of tax rates leads and benefits the government and raises the pressures for tax payments for individuals, as tax rates get increased. It leads to more spending by the government and thus leads to a reduction in individual benefits.