Reference no: EM1325804

Pretend as if you are an economist and explain

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?

Objective: Identify current trends in macro and microeconomics.
Analyze the relationship between fiscal and monetary policy in an open economy.
Critically analyze the role of government in a market economy.
Use effective communication techniques.

Tax rebate or a tax refund is a tool of fiscal policy. A cut in tax rates is not the same thing as a tax cut. A decrease in the tax rates could lead to an increase in taxes collected if income rises enough to compensate for the lower tax rate. Fiscal policy is controlled by the President and the Congress at the federal level. The primary issue with fiscal policy is that expansionary fiscal policy where crowding out could occur See pages 156-158 and pages 332-333. The role of fiscal policy can be found on pages 212-216 The increase in the Fiscal Multiplier makes policy more powerful. See pages 213-214. The learning objective is to understand the role of fiscal policy and to explore your beliefs about how the economy should function. Keep in mind that assigning the contribution of a tax cut must be done in the presence of other events taken place simultaneously. Post your response directly to the forum. Do not use an attachments; do not use a link. Comment on other students' responses And recall that there is a second questions in this DB, "Are there other changes to fiscal policy that you feel would have been more successful? Post your sources in a reference list posted in APA format.