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Essay on Macroeconomic Principles And Policy
Tax cut is a policy that is meant to stimulate the economy at times of recession. When the government cut taxes, this results in the increase in the net income of the individuals and the corporation. As a result the individuals have more money and they have two choices: either to spend on other means or to save the money that is not eaten up by the taxes. Apparently, the government has to meet the shortfall of money and come up with measures to cover the widening budget deficit after the tax cut. This it does by means of either issuing bonds or increasing sales in the foreign markets of its products and services.....
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