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Cigarette Taxes

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How will reduced smokers affect the GDP in the long and short run?
What does increased revenue from cigarette taxes do to the deficit and budget?

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Solution Summary

The increased revenue from cigarette taxes is accounted for.

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I'm happy to answer this, both as a consumer economist and as a former tobacco intern ;)

OK first, let me explain long run and short run. Its basically what it sounds like - the effect of some policies (etc) have different impacts on GDP (or any outcome) over time. For example, if I announced today that there is going to be a 50% increase in sales taxes, effective 6 months from now, then the short run effect would be an increase in consumption (i.e. people want to buy prior to the tax hike) and the long run effect would be a reduction in consumption.

"How will reduced smothers affect ...

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