0
Under the current economic circumstances in the USA, that is, government spending remains far above tax receipts, the treasury issuing bonds which are purchased by the Federal Reserve using quantitative easing, taxes will effect the money supply in an inverse relationship. That is, for every tax dollar collected, a dollar is removed from the money supply. Taxes are therefore deflationary under the current circumstances.
In other times and circumstances, when government properly modulates its spending such that taxes and spending are closely related to each other, increase of taxes will result in an offsetting increase in spending. In this case, taxation is not deflationary or inflationary, and there is no net impact to the money supply.
Wiki User
∙ 11y ago
Add your answer:
Earn +20 pts
How does raising the discount rate affect the money supply?
Decreases the money supply
Which of these can affect the economy by increasing or decreasing the money supply?
The Federal Reserve Board can affect the economy by increasing or decreasing the money supply.
Explain how different monetary policies affect the money supply in the economy?
"Explain how different monetary policies affect the money supply in the economy?"
What is a not a way the fed can generate an increase in the money supply?
Cutting taxes
Increasing the money supply involves which type of economic policy?
An economic policy of enhancing growth, especially in exports will increase the money supply. This can be measured from recent economic history. The last thing, or shall I say an increase in taxes will de-stimulate the growth of the money supply. Another negative would be to increase the money supply by fiat, or in other words "printing it"
How does raising the discount rate affect the money supply?
Decreases the money supply
Which of these can affect the economy by increasing or decreasing the money supply?
The Federal Reserve Board can affect the economy by increasing or decreasing the money supply.
Explain how different monetary policies affect the money supply in the economy?
"Explain how different monetary policies affect the money supply in the economy?"
How do taxes affect the US government?
it takes our money
What is a not a way the fed can generate an increase in the money supply?
Cutting taxes
What organization most affect the money supply?
inflation
How did gold mining affect the supply of hard money?
zz
What were parts of the reaganomics?
Pay Fewer Taxes Supply goods Banks loan money to business
What do monetarist believe?
the change in money supply will affect the price level
What were the three parts of reaganomics?
Pay Fewer Taxes Supply goods Banks loan money to business
Do you have to pay taxes when country was involved in illegal war?
You are required to pay taxes. The fact that you don't agree with what they are doing with the money does not affect that obligation.
Increasing the money supply involves which type of economic policy?
An economic policy of enhancing growth, especially in exports will increase the money supply. This can be measured from recent economic history. The last thing, or shall I say an increase in taxes will de-stimulate the growth of the money supply. Another negative would be to increase the money supply by fiat, or in other words "printing it"
