Answer to Question #54857 in Macroeconomics for Srying

Question

1. How to Value surplus , increase or decrease?
2. If tax decrease, what happen of inflation , why?

Answer 1

1. Consumer surplus is when a consumer derives more benefit (in terms of monetary value) from a good or service than the price they pay to consume it. Consumer surplus decreases when price is set above the equilibrium price, but increases to a certain point when price is below the equilibrium price.

2. Tax cuts will lead to more consumer spending and their impact tend to be inflationary, so the inflation may rise after the decrease in taxes.