This is a multipart question:From an Aggregate Demand and Supply perspective, does it matter which...

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This is a multipart question:From an Aggregate Demand and Supply perspective, does it matter which programs are adopted? Which programs do you recommend should be adopted?Should subsidies and tax breaks to business (corporate welfare to agriculture, forestry, export promotion, research and development, removal of dividends tax etc. ) be the focus or should subsidies go to individuals (subsidies to education, social security, unemployment insurance, aid to families with dependent children, Medicare etc.)? How will the programs proposed affect future growth possibilities for the economy (how will they effect the PPF and long run aggregate supply)?

Robert · Accepted Answer

From an Aggregate Demand and Supply perspective, does it matter which programs 
are adopted? Which programs do you recommend should be adopted? Should 
subsidies and tax breaks to business (corporate welfare to agriculture, forestry, 
export promotion, research and development, removal of dividends tax etc. ) be 
the focus or should subsidies go to individuals (subsidies to education, social 
security, unemployment insurance, aid to families with dependent children, 
Medicare etc.)? How will the programs proposed affect future growth possibilities 
for the economy (how will they effect the PPF and long run aggregate supply)? 
Answer: 
Both the programs i.e. subsidies and tax breaks to business and subsidies to 
individuals have their own importance in the economy. Subsidies and tax breaks to 
business are important for the following reasons: 
1. Through subsidies and tax breaks, businesses and corporate house are 
incentivizing to participate in productive works and to increase investment 
spending. 
2. Sometimes corporate houses/businesses dither while investing in risky 
projects and research & development activities. So if government provides 
subsidies and tax breaks, it would reduce their associated risks and thereby 
encourage them to invest more.

This is a multipart question: From an Aggregate Demand and Supply perspective, does it matter which programs are adopted? Which programs do you recommend should be adopted? Should subsidies and tax...

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