Asked by Christine Marie on May 28, 2024
Verified
President George W.Bush billed his $1.35 trillion tax cut in 2001 as both an immediate economic stimulus to fight the current recession as well as a long-term boost to economic growth.
A) it contributed to the budget surpluses continuing through his administration.
B) the tax cut caused no effect on the government surpluses/deficits in following years.
C) it resulted in a rapid and expanding government deficit.
D) it greatly improved the well being of the lower and middle income citizens.
Government Deficit
The financial situation that occurs when a government's expenditures exceed its revenues during a specific period, leading to borrowing or debt accumulation.
Economic Stimulus
Financial actions taken by a government to encourage economic growth or prevent an economic downturn.
- Comprehend the shift from fiscal surpluses to deficits, along with the factors that contribute to this change.
- Comprehend the impact and consequences of substantial tax decreases on the economic environment and fiscal deficits.
Verified Answer
AF
amira foudaMay 29, 2024
Final Answer :
C
Explanation :
The tax cut resulted in a rapid and expanding government deficit. Despite the long-term growth argument, the immediate impact of the tax cut was a decrease in government revenue, which contributed to a large government deficit. The budget was projected to shift from a surplus of $128 billion in 2001 to a deficit of $157 billion in 2002.
Learning Objectives
- Comprehend the shift from fiscal surpluses to deficits, along with the factors that contribute to this change.
- Comprehend the impact and consequences of substantial tax decreases on the economic environment and fiscal deficits.
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