Changes in which of the following are likely to affect interest rates?
Inflation expectations
Size of the federal deficit
Money supply
All of the above
According to the supply-side view of fiscal policy, if the impact on total tax revenues is the same, does it make any difference whether the government cuts taxes by either reducing marginal tax rates or increasing the personal exemption allowance?
i. No, both methods of cutting taxes will exert the same impact on aggregate supply
ii. No, people in both cases will increase their saving, expecting higher future taxes, and thereby offset the stimulus effect of lower current taxes.