Question:

What will happen to the GDP, exchange rate of a country if government increase the taxes?

by Guest32572  |  earlier

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suppose the government increase the taxes, what will effect of the policy on the GDP/Output, Inflation rate, Unemployment rate, exchange rate?

Note: assume that the economy is initially in equilibrium

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2 ANSWERS


  1. inflation goes down

    unemployment goes up

    gdp down

    exchange rate goes down

    This occurs until exchange rate goes down enough, then gdp goes up a bit coz exporting is soo good at that rate. And unemployment starts to go down, a little, increasing inflation a small small bit.


  2. can not answer this without knowing the taxes you are talking about

    income?

    sales or ad vals?

    import?

    export?

    targeted?

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