Macroeconomic policies in a global context：練習問題

• a.

  Reducing the rate of Value Added Tax (VAT) on all goods produced within the domestic borders.

• b.

  Implementing rules that require internal trades between company subsidiaries to be conducted at 'arm's length' market prices.

• c.

  Increasing the base rate of interest to make it more expensive for TNCs to borrow from domestic banks.

• d.

  Offering subsidies to TNCs to encourage them to shift their head offices to the domestic economy.

• a.

  A global recession could lead to a fall in export demand, reducing domestic GDP and tax revenues despite spending cuts.

• b.

  External shocks always lead to a decrease in interest rates, which makes debt reduction unnecessary.

• c.

  The government can always use exchange rate policy to fully offset any external shocks to the domestic economy.

• d.

  Global companies will automatically increase their domestic investment to compensate for lower government spending.

• a.

  An increase in total tax revenue as the higher rate is applied to the same tax base.

• b.

  No change in tax revenue because income tax is a direct tax and therefore has a neutral effect.

• c.

  A decrease in total tax revenue due to increased disincentives to work and higher tax evasion.

• d.

  An increase in tax revenue because consumers will work harder to maintain their previous level of disposable income.

• a.

  The resulting decrease in Aggregate Demand (AD) may lead to a fall in GDP that is proportionately larger than the reduction in debt.

• b.

  Public spending cuts lead to 'crowding out', which prevents the private sector from expanding.

• c.

  Austerity measures always lead to an appreciation of the currency, which increases the cost of debt servicing.

• d.

  Cutting spending automatically triggers the 'Marshall-Lerner condition', worsening the trade balance.

• a.

  A reduction in the main rate of corporation tax to encourage domestic investment.

• b.

  The privatisation of state-owned utilities to increase competition and efficiency.

• c.

  Increased government investment in STEM (Science, Technology, Engineering, and Maths) education and vocational training.

• d.

  Reducing the national minimum wage to lower the unit labour costs for all firms.

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