Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Reagan campaigned for a phased 30 percent tax cut within the next three years in officeMost of the tax cuts focused on the lower -income and poverty levels . True or False?
The Tax Cuts and Jobs (TCJ) Act of December 2017 introduced the largest reform to the U.S. tax code in more than three decades. One of the most significant changes involved the introduction and refinement of wage income taxes with standard deductions for low-income workers. This change can be introduced into the representative consumer's problem by considering a tax rate of t = 0 for the first I units of real wage income, followed by a proportional tax t on each unit of real wage income greater than r. Therefore, the consumer's optimization problem can be re-expressed as follows: Max U(C,1) subject to Jw(h - 1) + a, ifw(h – 1) 0 I. Determine the effects of the introduction of the deduction on tax payıments. In particular (a) Graph the consumer's budget constraint. (b) Determine the optimization point for the case of a person who does not pay any taxes. Graph. (c) Determine the optimization point for the case of a person who pays taxes. Graph.
Tax is not the only way to finance the government expenditures. Government borrowing has been a major mechanism to sustain the large outlays in the recent decades. In the 2009 financial crisis, the Obama administration has implemented a large stimulus. Retrospectively, however, it was likely to be too small to bring the U.S. economy back to the trajectory. In contrast, the spending during the 2020-21 pandemic has been significantly larger (both under Trump and Biden administrations). Using the budget projection in the CBO's report, contrast the magnitude of the budget deficit in 2009 and 2020, and 2021 and describe your findings.
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