Learning journal 8 on introduction to Economics.docx - In...

This preview shows page 1 - 2 out of 2 pages.

In at least three well composed paragraphs, please describe the effect that changes in business taxes, personal income, and transfer payments have on a country’s gross domestic product (GDP).Business taxes:Reducing the business tax rate would lead to higher investment, faster productivity growth, faster economic growth and higher wages, which would offer a higher standard of living for workers likewise, when business taxes are increased the income goes down and so they will start cutting on their spending, also on their saving and workers will also feel like working less due to income and when taxes decrease, their spending increases, both the workers and companies are motivated to work even more due to substitution effect as this has an effect on the GDP.Personal income:Personal income has a large effect on consumer consumption, and since consumer spending drives much of the economy therefore as personal income increases, that means that consumption will also increases and

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture