cutting tax rates

Question 1

KAA 1

Answer 1

K - exports
An - firms will now have more money which they can reinvest. results in innovation, more efficient and more competitive on global market
Ap - US corporate tax cut by 14% in 2018

Question 2

Eval 1

Answer 2

less government spending on infrastructure, education etc.

Question 3

KAA 2

Answer 3

K - consumers consumption
An - consumers now take home more of their income. increase in disposable income. consumption component of AD
Ap - US 2018 top income tax rate cut by 2.6%

Question 4

Eval 2

Answer 4

can result in crowding out as government have to borrow money which increases interest rate preventing firms from taking loans and forcing firms to shut