Can someone explain it to me?

Question

Describe opportunity costs for the following. Please provide a description of the short term impact and a description of the long term impact for this opportunity cost. The federal government raising taxes.

Answer 1

short term: you have less money in your pocket to spend
longterm: you buy less stuff on economy and people get laid off.

Taxes while a pain actually help slow our economy down. So does raising and lowering interest rates. The Goverment uses either, but very rarely in conjunction with each other. That would be tantamount to a train locking up all the brakes at once with 'rapid deceleration' uncontrol. It's from a model named after Keyenes who proposed these two methods for controlling a Nations aggregate economy.

Answer 2

If I pay x dollars in taxes, That means I dont have x dollars to build a factory. If I dont have a factory, I cant hire you tomake them so I can sell widgets to your girlfriends dad, who needs widgets to make his whatsitz. With no widgets to make whatsitz, Dad has to close his plant. That means your girlfriend cant go out with you because she has to get a job and that is th opportunity cost of taxes