Reference an item in the news about a controversial issue (current tax reform pr

Question

Reference an item in the news about a controversial issue (current tax reform proposal, budget deficit remedies, education vouchers, raising gas tax rates, minimum wage increase, infrastructure overhaul, reforming entitlements, government investment in 'green technology' etc) and list the economic concepts we have studied that can be applied to it. Leafing through the chapter exhibits and charts as well as reviewing the Power Point questions would be a good reminder of the key concepts we have addressed. Provide a one or two sentence description of how each economic concept listed is relevant. Obviously, not every economic concept we have covered will apply to your particular issue but quite a few will. Reference an item in the news about a controversial issue (current tax reform proposal, budget deficit remedies, education vouchers, raising gas tax rates, minimum wage increase, infrastructure overhaul, reforming entitlements, government investment in 'green technology' etc) and list the economic concepts we have studied that can be applied to it. Leafing through the chapter exhibits and charts as well as reviewing the Power Point questions would be a good reminder of the key concepts we have addressed. Provide a one or two sentence description of how each economic concept listed is relevant. Obviously, not every economic concept we have covered will apply to your particular issue but quite a few will. Reference an item in the news about a controversial issue (current tax reform proposal, budget deficit remedies, education vouchers, raising gas tax rates, minimum wage increase, infrastructure overhaul, reforming entitlements, government investment in 'green technology' etc) and list the economic concepts we have studied that can be applied to it. Leafing through the chapter exhibits and charts as well as reviewing the Power Point questions would be a good reminder of the key concepts we have addressed. Provide a one or two sentence description of how each economic concept listed is relevant. Obviously, not every economic concept we have covered will apply to your particular issue but quite a few will.

Explanation / Answer

The topic selected for the mention and the application of economic concepts is proposed tax reforms that proposes to reduce the taxes, but also focuses in reduction of benefits issued to the people to compensate the losses caused due to the reduced tax revenues.

The economic concepts and policies are as follows:

The first concept is marginal concept. It will be applied in the form of marginal propensity to consume. It focuses upon the additional spending with an additional increase in income. The reduction I taxes will increase the disposable income and with increase of it, the consumption will also increase. It will boost the aggregate demand and real GDP will grow.

The second concept is the demand, creating its own supply as proposed by Keynes. When the aggregate demand increases, to cater these demands, supply will also increase and robust growth of the economy will take place.

The third economic concept is the role of automatic stabilizers. These are the policy initiatives that pull the economy back to the equilibrium. For example, unemployment benefits and subsidies offered to the firms are example of automatic stabilizers. This concept is relevant because the proposed tax reform is aiming to reduce the quantum of automatic stabilizers that make the economy, unable to recover on its own.

The fourth policy or concept is the role of fiscal policy. Changing the taxation is the part of structural reform and comes under the purview of fiscal policy. Due to this reason, the fiscal policy and the result gap in tax revenue collection is important.

The fifth concept is income equality and class conflict. It deals with the policy that reduces the income disparity among different groups of people. But the existing tax reform proposal does not seem to solve the problem of income disparity.

Reference:

Digging Into the Details of Trump's Tax Reform Plan. Retrieved from: https://www.bloomberg.com

Full web URL cannot be given due to answering board guidelines.

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