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Macroeconomics 11th Edition by Michael Parkin
Edition 11ISBN: 9780133423884Macroeconomics 11th Edition by Michael Parkin
Edition 11ISBN: 9780133423884 Exercise 5
Use the following news clip and fact to work the Problem
Senate Approves Obama Tax Cut Plan
The U.S. Senate has passed legislation extending Bush-era tax cuts for middle-class Americans earning up to $250,000 per year.
Fact: Middle and low-income earners spend almost all their disposable incomes. High-income earners save a significant part of their disposable incomes.
a. Explain the intended effect of extending tax cuts for middle-class Americans but not for high-income families. Draw a graph to illustrate the intended effect.
b. Explain why the effect of tax cuts depends on who receives them.
Senate Approves Obama Tax Cut Plan
The U.S. Senate has passed legislation extending Bush-era tax cuts for middle-class Americans earning up to $250,000 per year.
Fact: Middle and low-income earners spend almost all their disposable incomes. High-income earners save a significant part of their disposable incomes.
a. Explain the intended effect of extending tax cuts for middle-class Americans but not for high-income families. Draw a graph to illustrate the intended effect.
b. Explain why the effect of tax cuts depends on who receives them.
Explanation
Verified
Verified
Fiscal stimulus:
It is observed that lo...
Macroeconomics 11th Edition by Michael Parkin
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