Crowding out involves significant increase in the rates of interest following the rising increases in government borrowing in the money market. A hotel can use the theory of crowding out to enable an increase in the room rates, which will ensure improved profits over a specific period of time.

Question Four

The long-range effects of a stimulus plan in the banking sector are as varied as the economic condition at the given period of time. Governments employ stimulus plans to boost the economic growth of the country. In this regard, the banking sector experiences a decrease in public borrowing while at the same time increasing the aggregate demand of goods and commodities, which follow the inflow of money supply.

Question Five

An emission tax is employed to enable a reduction of the level of carbon dioxide that organizations emit to the environment. The tax is designed to enable the efficient management of the macroeconomic natural resources while ensuring that economies receive revenue from the use of the environment. The proper management of carbon dioxide emissions ensures the sustainability of various industries through development and industrial growth.

Question Six

A fair tax system is one that enables both the stakeholders i.e. the government and the citizens to strike a balance in sharing the burden that results from the management of the tax. The advantage of such a tax system is to enable sufficient and sustainable management and government collection, thereby ensuring improved levels of economic growth. The disadvantage associated with such tax systems is the difficulty in ensuring a balance of tax burden sharing between the government and the general public.

Question Seven

Governments employ entitlement programs to enable the country to facilitate the repayment and management of its debts. When efficiently managed, social security entitlement program will enable many of the country’s citizens to access sufficient and manageable social services while providing the needed resources to support the proper and efficient management of such resources. Further, the efficient management of medicare entitlement program will enable the public and the government to sufficiently enjoy the benefits associated with the program.

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