Which tax strategy has a stronger effect in the long term?

In mid-February 2008 Preside Show more The following consists of TWO unrelated questions 5A and 5B: 5A. In mid-February 2008 President Bush and Congress approved a $168 billion stimulus package that will provide tax rebates to all taxpayers that is to those who file their tax returns. The tax stimulus was in addition to a tax rate cut which was implemented earlier in 2002. The stimulus checks were mailed in May 2008. In February 2011 under President Obama administration Congress voted to extend the Bush era tax rate cut to all levels of income. Please analyze the stimulus package by using the income multiplier. (A tax rebate is a decrease in autonomous tax the To in the total tax formula mentioned in class). Using the derivation of the income multiplier which we discussed in class please show the effects of: 5ai A tax rebate on the US GDP; and 5aii A tax rate cut on the US GDP. Which tax strategy has a stronger effect in the long term? 5B. Prior to 2007 i.e. prior to Wall Street financial problems and the subsequent recession what factors have caused the extraordinary growth of the US economy accompanied by such low inflation rate? Please use the Aggregate Supply and Aggregate Demand curves to buttress your answer. Show less

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