Thursday, April 03, 2014




The impact of consumption tax on the economy【memo2】

I said that hike in consumption tax never influences GDP, but I don't believe it. The hike will make people buy less of the pricy goods and more of the cheaper goods, and, what's more, the hike will lower their purchasing power and thus their consumption of whole goods. The point is, which effect is greater? The greater the latter effect, the less consumption and GDP.

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