Question

Under an expansionary taxation policy, the government tries to stimulate economic growth by

Answer 1

Under an expansionary taxation policy, the government tries to stimulate economic growth by reducing taxes.

Further Explanations:

An expansionary policy aims to boost the monetary growth of a nation.  Governments exercising an expansionary policy reduced the tax raise investment and production of the business along with the economic stability of the consumers.  The motive is to not charge tax directly from the inhabitant but through their monetary activities. In December 2017, the United States legislature led by “Republicans” passed a tax cut package that reduced the tax rates on the companies from 35% to 21% and at the same time lowered inhabitant income tax rates.  

One such instance of expansionary taxation was reported in April 2018. Wal-Mart pronounced it would spend $700 million on job conception along with higher wages. The amount was very small as equated to the $4 billion, that Wal-Mart planned so as to surge its stock value and profit the investors and shareholders.

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Answer details

Grade: High School

Subject: History

Chapter: Expansionary policy

Keywords:

expansionary policy, boost, economic stability, monetary activities, United States, Republicans, April 2018, Wal-Mart, investors shareholders, expansionary policy

Answer 2

B. Reducing taxes

Expansionary policies seek to encourage economic growth.  Governments pursuing an expansionary policy will cut taxes in order to stimulate investment and production by businesses and economic activity by consumers.  The idea is that by putting more money back into the pockets of taxpayers (whether corporations or individuals), they will respond by using the dollars not paid in taxes in ways that will generate greater levels of economic activity in the country.  

In December 2017, the US Congress (led by Republicans) passed a major tax cut package, which reduced tax rates on corporations from 35% to 21%, as well as lowering individual income tax rates.  It remains to be seen, however, how well the tax cut policy will work to improve overall economic well-being in America.  Much of the benefit goes to stockholders and investors, more so than to workers.  Market Mogul reported in April, 2018, that while Walmart announced it would spend $700 million on job creation and higher wages, that amount is very small compared to the $4 billion that Walmart plans to use to increase its stock value and benefit its investors, shareholders, and executives.  So a major argument continues to be debated, as to which sectors of the economy are helped by an expansionary tax policy.