How rapid GDP growth can reduce fiscal deficit?
- OiyLv 63 weeks ago
It mainly due to an increase in trade and tax revenues. And the growth will bring along the inflaion. To stop or prevent it,the FEd has to raise the fund rate, and the govermnen has to reduce fiscal policy.
- kswck2Lv 74 weeks ago
It can also backfire. Uncontrolled growth can also be met with too much expansion, thus leaving a gap in having too many products and not enough consumers to buy them, which creates a glut.
- SandyLv 71 month ago
just like it does when you get a fatter paycheck, you pay off some of your credit cards. well responsible people do anyway. ; )
- busterwasmycatLv 71 month ago
the idea is that the taxed amount, as a (relatively) fixed proportion of all production, will increase at about the same rate as total production (GDP). Tax revenues will increase when GDP increases. It can only be used to fix the deficit if outlays are not linked to GDP as well, though. Deficit=money in (tax revenue) - outlays (spending). As long as GDP change causes revenue to increase more than spending, deficit must fall.
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- Anonymous1 month ago
It can’t, if the people pocketing all of the money get tax cut after tax cut after tax cut.