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Suppose Real GDP Is Currently $12

question 221

Essay

Suppose real GDP is currently $12.5 trillion and potential real GDP is $13 trillion.If the president and the Congress increased government purchases by $500 billion,what would be the result on the economy?


Definitions:

Tax

Mandatory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization.

Tax Cuts

Reductions in the amount of taxes that individuals or corporations are required to pay to the government.

Tax Revenue

The monetary gains that are acquired by governments from taxation.

Arthur Laffer

Arthur Laffer is an economist known for the Laffer Curve, which posits that there is an optimal tax rate that maximizes revenue without discouraging economic activity.

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