Why Is Raising Taxes Bad For The Economy? How do taxes affect the economy in the long run? Primarily through the supply side. High marginal tax rates can discourage work, saving, investment, and innovation, while specific tax preferences can affect the allocation of economic resources. But tax cuts can also slow long-run economic growth by
What Happens When Both Government Spending And Taxes Increase? The balanced-budget multiplier is equal to 1 and can be summarized as follows: when the government increases spending and taxes by the same amount, output will go up by that same amount. What happens when there is an increase in government spending? Increased government spending is
Do Higher Taxes Increase Or Reduce Investment Quizlet? Do higher taxes increase or reduce investment quizlet? Higher taxes reduce supply because the government has more money to invest in goods and services. Higher taxes reduce demand because consumers have less money to spend. Do higher taxes increase or reduce investment? High marginal tax rates can