Inflation
- Inflation - is a general raise in the price level.
- Deflation - a general declare in the price level.
- Disinflation - decrease in rate of inflation overtime.
- Stagflation - unemployment & inflation increase in the same time.
Supply side economics
- Supply side economics - make change in AS but not AD, and determend the level of inflation, unemployment rate & economic growth.
- Lower marginal tax rate induce more work tto work for a long time.
- Also make things more expensive and worth more opportunity.
- Supply side economics support policy that promote GDP grow by arguer high marginal taxes rate along with the current such as unemployment, compensation, to work in vest innovate, and undertake entrepreneur gesture.
Incentive to save
- High marginal tax rate can reduce the reward for saving & investment.
- Consumption might increase but investment depend upon saving.
- Lower marginal taxes rate encourage saving & investment.
- Laffer curve - it depit a teoradical relationship between tax rate & govt revenue increase from zero to some maximum level and then declain
Creations of laffer curve
- Reseache suggest that the important of tax rate on incentive to work, save, & invest are small.
- Tax court also increase demand with can fuel inflation, which cause demand to exceed supply.
- worth economy is actual locate on the curve, is different to determined.
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