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Discretionary fiscal policy

Unit 5 IP
Write a 2-3 page paper explaining why time lags in discretionary fiscal policy can adversely affect the efforts of the Congress and the President in attempting to maintain a healthy economy. Could it happen that these time lags could actually work to destabilize the economy?

Unit 5 DB 2-3 paragraphs
In 2003, the Internal Revenue Service began to mail out refund checks because of a change in the tax law. Economic forecasters predicted that consumption and GDP would increase because of higher refunds on income taxes.
Pretend as if you are an economist and explain your thoughts on whether the tax cuts from the past few years have been successful in promoting economic growth or in preventing a deeper decline? Are there other changes to fiscal policy that you feel would have been more successful?

Unit 5 IP 2 1-2 pages
1. Describe three ways in which the Federal Reserve can change the money supply.
2. If the Federal Reserve is going to adjust all of these tools during an economy that is growing too quickly, what changes would they make?
3. If the Federal Reserve is going to adjust all of these tools during an economic recession, what changes would they make?
4. What changes, if any, to the current condition of these tools would you make at the next meeting of the Federal Reserve? Explain why and the benefits/drawbacks of this strategy.

Solution Preview

The response addresses the queries posted in 412, 477 & 617 words with references.

//Before writing about the measures taken by the internal revenue services, we have to understand the alterations in the tax rates. We will also discuss about the effect of tax cut on the economic growth of the Country. The fiscal policy and the alterations in the fiscal policy will also be discussed. It will assist in understanding the effect of the Government Policies on the economic performance.//

Discussion Board

The 'Internal Revenue Service Agency' of the United States of America is accredited with the responsibility of collecting tax in the country. In the present scenario of US, the tax rates are at a diminishing rate and this agency is paying back the checks to the public. Talking in general sense, the economic growth of a country is affected by the tax rate paid by the residing citizens.

For an economy to grow, tax cuts in the recession period is essential. Due to the reduction in taxes, there will be an increase in the revenue of the government which will further give rise to the public expenditures. An increase in the government expenditure will boost the economic development of the country. Also, the increase in tax cuts is done so as to have a better contribution in the budget deficit.

Fiscal Policy is credited with the responsibility of bringing modifications in the economy of a country through the change in the tax policy. The lower the tax rate in the fiscal policy will be the more good it will be for the country. But, the federal authorities should not forget to take in consideration the inflation rate of the country. The expenses on the public should be increased in order to have rapid economic development.

The administrators of the country can reduce the tax rates by increasing the demand. This will result in an increase in the income level of the people. Repaying of the checks will also help in increasing the income level. Further, this will result in the increase of the demand of goods and services. Taxes on import can be increased by the federal authorities by making the positive 'balance of payment' (Hansen & Burke, 2003).

// I hope the assistance provided by me is quite sufficient to address the queries. It will surely help you to develop a better understanding of the topic discussed and enhance your knowledge. I am ...

Solution Summary

The response addresses the queries posted in 412, 477 & 617 words with references.