--%>
Assignment Help - homework help

Near-term policy

How might expectations of a near-term policy reversal weaken fiscal policy depend on changes in tax rates? 

E

Expert

Verified

A reduction in tax rates might be enacted to stimulate consumer spending.  If households attain the tax cut but expect it to be reversed in the near future, they might hesitate to rise their spending.  Believing that tax rates will increase again (and possibly concerned that they will rise to rates higher than before the tax cut), households may instead save their added after-tax income in anticipation of requiring to pay taxes in the future.

   Related Questions in Finance Basics

  • Q : Describe demand factor Normal 0 false

    Normal 0 false false

  • Q : Describe Section 28.00 Section 28.00 :

    Section 28.00: It is a Control Section of Budget Act which authorizes the Director of Finance to support the augmentation or diminution of items of expenditure for the receipt of un-anticipated federal funds or other non-state funds, and which identif

    		•
  • Q : Influence of mergers on fees assessed

    What influence have mergers had on fees assessed for retail bank services? The effect is not clear. Market conditions and the level of competition often determine the cost for retail bank services.

    		•
  • Q : Question on hypothetical economy Normal

    Normal 0 false false

  • Q : None what are the disadvantages of

    what are the disadvantages of working capital

    		•
  • Q : Describe Treasury bill Describe

    Describe Treasury bill? How risky is it?Treasury bills are short term debt instruments issued through the U.S. Treasury which are sold at a discount and pay face value at maturity.  They are very close to risk-free as they are backed throug

    		•
  • Q : Define Financial Planning Financial

    Financial Planning: It is a comprehensive assessment of an investor's present and future financial state by employing presently known variables to forecast future cash flows, asset values and the withdrawal plans.

  • Q : Aggregate expenditure Normal 0 false

    Normal 0 false false

  • Q : Difference among proforma financial

    Describe difference among pro forma financial statements and a cash budget? Depict why pro forma financial statements are not utilized to forecast cash needs. Pro forma income statements deal along with revenues and expenses which are not alway

    		•
  • Q : Frequency Distribution What is

    What is Frequency Distribution? Compare Categorical Frequency Distribution, Ungrouped Frequency Distribution, Grouped Frequency Distribution?

    		•