When the democrats took control of congress in 2007 they proposed more government spending paid for with high

Question

taxes on the rich. what impact would these options have on macro equilibrium

Answer 1

"Macro equilibrium exists when the demand and supply variables affecting total economic activity are in balance and under no pressure to change."

http://www.businessbookmall.com/Economic...

When gov implements new policy (say higher taxes) that will target one specific group (say anyone who has a job, aka "the rich,") it will create an economic effect (aka an imbalance), not equilibrium.

Higher corporate taxes always result in higher costs to consumers and fewer jobs.

Higher taxes on individuals result to decreased spending, then a slower economy.

Higher taxes on the "rich" result in the "rich" decrease investing in new business or new technology, hence fewer jobs, and slower growth.

Lower taxes result in stimulus to the economy, increase economic investment, greater consumer and corporate spending, more (tax) money to the states due to increased profits due to consumer spending (sales tax); a higher stock market which means profit to investors, and more tax money to the Treasury.