Using taxes to manage the economy
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Introduction
In this activity, students explore how the government can alter the level of economic activity (total spending in the economy) by changing the rates of the various types of taxes that consumers and businesses are required to pay. They predict the effect of a reduction in various tax rates on the level of economic activity and on key economic goals including low inflation, low unemployment and a sustainable rate of economic growth.
This activity focuses on the effect of tax changes on the level of economic activity and on domestic macroeconomic goals.
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Using taxes to manage the economy
Using taxation to manage the economy
Suggested activity sequence
This sequence is intended as a framework to be modified and adapted by teachers to suit the needs of a class group.