only answer2 answer 1 and 2 is best~ I will give high rate 1.US President Donald
ID: 1107207 • Letter: O
Question
only answer2
answer 1 and 2 is best~ I will give high rate
1.US President Donald J. Trump has proposed a reform plan that will cut down the
tax dramatically once getting through.
1What do you name such a policy as tax reduction by the government?
2Use macroeconomics to illustrate the most important indicators of US economy
such as GDP, interest rate etc., supposing that the Trump Tax Plan takes effect in
2018.
3 Some argues that tax reduction will finally lead to an increase in the
government revenue. Make your point with examples.
2.Continue with 1. If the Federal Reserves are quitting Quantitative Easing at the
same period:
1What do you name such a policy as reducing money supply by the central bank?
Combine the two policies in 1 and 2 and predict the GDP and interest rate of US in
2018 comparing with 2017.
2Hong Kong is a small open economy that fixes its exchange rate to US dollars.
What will the economy suffer as US shifts its policies.
3If you are in charge of the Hong Kong Monetary Authority, what can you do to
sterilize the shock from US? Is it effective in the long run? Why?
Explanation / Answer
Ans1. President Trump started an aspiring push to cut expenses and rescue what stays of his troubled administrative motivation in Congress this year, proposing a politically difficult cluster of tax breaks for people and organizations that would constitute the most major developments to the government assess code in decades. "This is a progressive change, and the greatest victors will be the ordinary American specialists as occupations begin immersing our nation, as organizations begin seeking American work and as wages begin going up at levels that you haven't seen in numerous years."
1. Such a policy may be called as expansionary fiscal policy by the federal government.
2. After such tax reductions, the most essential markers of US economy, for example, GDP, financing cost and so forth will cost government according to individuals from the Senate Budget Committee have conceded to a spending determination that would take into consideration a $1.5 trillion tax break more than 10 years. Investigations of comparative designs created by Mr. Trump and House Republicans have been anticipated to cost $3 trillion to $7 trillion over 10 years.
"Recognizing that some key subtle elements are as yet missing, a great standard is that this assessment design could build (GDP) development by no less than 0.5 percent for every year," By actualizing tax reductions, the U.S. Treasury Department could confront a "static cost around the $2.0 trillion zone,". The Treasury could be compelled to obtain all the more, conceivably expanding the deficiency during an era of officially high getting and rising financing costs.
3. The way that tax breaks are coming at the develop phase of the cycle and not in an average post-retreat implies the 'affinity to spend' could in all likelihood be higher than verifiably watched. Over 10 years, the level of GDP could be 5 percent higher than a standard gauge,". RBC assesses that cutting charges could add a normal $10.50 to a S&P 500 organization's income for every offer (EPS) more than one year. Income per share is a critical metric utilized by stock merchants to demonstrate an organization's gainfulness. In this way adding an extra 200 focuses to the S&P.
"This is an immediate course through to the primary concern. We'd likewise need to consider any effect from expanded buybacks from a lower corporate rate as well as from repatriation streams. In addition, we'd need to consider the positive thump ons to top line development from a firmer GDP profile on the back of the individual expense decreases," they said. Buybacks happen when firms buy their own offers, lessening the extent in the hands of financial specialists. Like profit installments, buybacks offer an approach to return more.
Ans2. When Trump government brings tax cuts and at the same time Federal Reserves are quitting Quantitative Easing at the same period then,
1. Such a policy will be named a contractionary monetary policy by the Federal Reserve because it is reducing the money supply in the system. When both the effects were combined then the overall effect can be contractionary as financial system depend much on money supply in the economy.
2. Due to contractionary monetary policy, the economy of Hongkong will suffer as the exchange rate of Hongkong vs dollar will appreciates. This will result in increased value of dollar against hongkong currency. This will be helpful for exporters but the importers will have to pay very much higher price for a product.
3. Hongkong monetary authority can use the expansionary fiscal policy to sterilize the shock from the US. They can decrease the interest rates to increase money supply and buy back government bonds in the market.
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