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Income Tax and the Current Account Deficit

Question

Discuss whether a rise in income tax will reduce a current account deficit.

Category:

Taxes and subsidies

Frequently asked question

Preview Answer

I. 🍃Introduction
- Brief explanation of the topic
- Thesis statement

II. Reasons why a rise in income tax might reduce economic growth
- Reduction in disposable income
- Lower consumer spending
- Lower spending on imports
- Reduction in demand-pull inflation
- Encouragement for firms to switch products to the export market

III. Reasons why a rise in income tax might not reduce economic growth
- Reduction in saving rather than spending
- Rise in government spending
- Increase in demand for wage rises
- Increase in costs of production
- Reduction in international competitiveness

IV. Analysis of the impact of a rise in income tax on economic growth
- Comparison of the positive and negative effects
- Discussion of the overall impact on economic growth

V. 👉Conclusion
- Summary of the main points
- Final thoughts on the topic

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