Effects of Fiscal Policy:
Think about how fiscal policy can effect your firm. Please address the following questions:
1. Suppose the government imposes tax cuts for 95% of all households. How does this affect your firm?
2. Trade policy is also an important tool for the government in regulating exports and imports. Give an argument for or against trade in terms of what would benefit your firm. Explain your reasons. Be sure to support your answer. See resources below.
3. Using the material from the case assignment, would the implementation of a tariff be considered expansionary or contractionary fiscal policy? Explain.
Resources to use on the concept of Trade:
This assignment discusses an application of the production possibilities frontier model. It is useful to review Chapter 2 from the background material section. You can also do your own research on the free trade debate or review the resources below:
Blinder, A.S. "Free Trade." Library of Economics and Liberty. Retrieved September 1, 2011 from:
https://www.econlib.org/library/Enc/FreeTrade.html
Friedman, M. (1997) "The Case for Free Trade." Hoover Digest. Retrieved September 1, 2011 from: click here
Kliesen, K. (2004). "Trading Barbs: A Primer on the Globalization Debate." Retrieved September 1, 2011 from:
https://www.stlouisfed.org/publications/re/articles/?id=19