Which of the following is more likely to be effective in increasing the growth rate of real gdp?

a.

permanent cuts in business taxes

b.

temporary cuts in income taxes

c.

a

oneminus−time

personal income tax rebate

d.

all cuts in taxes are equally likely to increase the growth rate of real gdp.

A. permanent cuts in business taxes

Explanation:

Cutting taxes is a government fiscal policy that aims at increasing aggregate demand, thereby stimulating growth.  Real GDP is the total value of a country production adjusted for inflation. A cut in business taxes reduces the cost of production. Sellers can offer goods to customers at a lower price.  A reduction in prices has similar effects to an increase in incomes. With an increase in purchasing power, individuals will have the ability to buy more, leading to an increase in demand.

Manufacturers react to an increase in demand by producing more goods. An increase in production is an increase in real GDP.  Therefore, a permanent cut in taxes will lead to an increase in real GDP.  Real GDP is calculated per financial year. A temporal tax cut may lead to a term short term rise in demand.

in 2001, dell computer became the world’s largest personal computer vendor, continuing to

gain market share and post profits in an industry struggling with slumping sales and billions of

dollars in losses. dell sells 90% of its pcs directly to the final customer, largely bypassing the

reseller channel that accounts for most of the world’s pc sales. this direct customer relationship

is the key to dell’s business model, and provides distinct advantages over the indirect sales

model. dell’s direct relationship with the customer allows it to tailor its offerings to customer

needs, offer add-on products and services, and use the internet to offer a variety of customer

services. in addition, dell’s pcs are built to customers’ specifications upon receipt of an order,

giving dell additional advantages over indirect pc vendors who must try to forecast demand and

ship products based on those forecasts. dell’s direct sales and build-to-order model has achieved

superior performance in the pc industry in terms of inventory turnover, reduced overhead, cash

conversion, and return on investment (kraemer, et al., 2000).

explanation:

answer; ///product strategy;