Hi everyone !!
I have just completed reading chapter eight from the book, Principles of Microeconomics which is about how the government tax that affects the supply and demand curves and its impact that brings towards the larger dead weight loss of tax. It is mainly about how the tax reduces the benefit gained by both consumers and producers. Mainly the benefit gained by the consumer is called as the consumer surplus while for producer is the producer surplus. Consumer surplus means that the amount of the consumer willing to pay minus the amount of consumer paid ( benefit ).
On the other hand, the producer surplus means the amount of producer get minus the cost of the product (benefit ). Tax ( Goods and Service Tax ) is part of the fiscal policy imposed by the federal government. Other than that, federal government has cooperated with the Bank of Canada via monetary policy by controlling the amount of money supply and the overnight rate for each commercial bank operating around Canada. This monetary policy would alter the change in the money supply-demand model, investment model, aggregate expenditure model and the supply and demand model.
- Shoutul Humaira-