Eco 100 Week 9 Discussion and Response

Anonymous
timer Asked: Nov 30th, 2018
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Question description

"Exploring Tax Cuts, Jobs, and CBO in the News"

The news today is all about this question:

Will the Tax Cuts and Jobs Act reduce deficits and what will happen to the U.S. debt?

Watch this video: U.S. Deficit to Surpass $1 Trillion Two Years Ahead of Estimates, CBO Says

The video cites the Congressional Budget Office (CBO).

Discuss these questions in your post:

  • Visit the CBO website and confirm that the reporting is accurate. Was the reporting accurate? Why or why not?
  • Do you think the Tax Cuts and Jobs Act will reduce our deficits? Explain your answer.

Please read the course materials for the week before answering the discussion question! In this discussion, you have to watch the video on the Congressional Budget Office (CBO) to answer the question below:

  • Visit the CBO website and confirm that the reporting is accurate. Was the reporting accurate? Why or why not?
  • Do you think the Tax Cuts and Jobs Act will reduce our deficits? Explain your answer.

When addressing the issue raised by this question, make certain you understand the following points:

  • An increase in government spending or a decrease in taxes will increase aggregate demand and shift the AD curve to the right.
  • A decrease in government spending or an increase in taxes will decrease aggregate demand and shift the AD curve to the left.
  • Changes in government spending affect aggregate demand directly because it is a direct component of AD (Y = C + I + G + NX).
  • Changing taxes affects aggregate demand indirectly.
    • Changing taxes on income causes changes in the level of consumption, one of the four components of aggregate demand.
    • Changing taxes on businesses changes their incentives regarding investment spending: another component of aggregate demand.
  • Government policy actions that lead to increases in aggregate demand are called expansionary policies.
  • Government policy actions that lead to decreases in aggregate demand are called contractionary policies.
  • The use of fiscal policy is straightforward with regards to stabilizing the economy through the use of fiscal policy but the implementation of effective policy is much more difficult.

Class: How are tax rates and tax revenues related?


RESPONSE TO CLASSMATE: Discuss with your peers:

  • Reply to a peer’s response. Did they share the same reasoning about the Tax Cuts and Jobs Act as you did?

"Exploring Tax Cuts, Jobs, and CBO in the News"

Class and Professor,

I believe that the CBO reporting was accurate. They have the information from years past, current and trends and they are making forecasts based on this information, not predictions. They also take into account the aging population that is no longer contributing to the economy by working and earning money but now drawing from their social security and retirement. If the government keeps spending without making cuts in the budget allotment, the deficit will also keep increasing more rapid than previously thought.

I do not think that tax cuts will help reduce any deficits, just like when Obama gave us stimulus checks. The extra money was nice to help us make the payments we were behind in or buy something nice, but they did not affect the deficit. The government needs to control and reduce their spending and learn how to streamline their jobs like most other businesses have done. Not cutting out the bottom worker but the highest paid ones that would help reduce spending. We need to also take care of people in our own country before sending money, support, troops, and supplies to other countries.

The Jobs Act had good intentions but again where is the money coming from to fund small businesses? Is this going to lower the deficit no? With tax cuts, there is less money coming into the government, so that is not helping lower the deficit. The Jobs Act could help if the funding is not coming from the government and is from private sources, then this could increase the number of businesses in the U.S. and increase the economy.

Thank you

Mary

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School: UIUC

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