a) A Goods and Services Tax or GST is a form of consumption tax. It is a tax on spending, as opposed to income tax, which is a tax on salaries, and corporate tax which is a tax on profits. GST came into effect from April 1, 2015 in Malaysia at a standard rate of 6%. But that does not mean everything would be taxed at the standard rate. Some essential goods and services have been made either zero-rated or entirely exempt.
It now appears as though this might become reality as GST, the replacement of Sale and Service Tax (SST) was implemented with a standard rate of 6% and was effective from 1st April 2015. The implementation of GST aims to strengthen tax compliance, through simpler and more transparent tax system to increase the efficiency of current taxation system. On top of that, government is looking ways to rein back national budget deficit by diversifying its source of income and less dependence on oil revenue. GST would have profound impact on low and middle income households than high income households. For families in lowest earning group, their monthly income are RM605 and contribute 2.62% of GSTI.
Cheaper exports increases demand for UK exports. Therefore, there is an increase in domestic aggregate demand, and we may get demand pull inflation. • Less incentive to cut costs. Manufacturers who export see an improvement in competitiveness without making any effort. Some argue this may reduce their incentive to cut costs,
An increase in wages leads to a decline in supply of goods and services because labor is considered as a business cost. However, a reduction of labor costs also results in a decline in demand because the supply side creates the demand equation. The reason for this is that as costs of business are reduced by reducing the cost of labor, the result is that there are jobs lost and therefore there is less money on the demand side as well. Where there is a shortage of skills, high wages must be paid to ensure that workers are attracted. However, low skill jobs have many people who can work and therefore the result of this is low wages for such tasks (Gerhard, 2009).
Due to their increased consumption, there is an incentive for firms to increase their output, since they could maximize their utility by increasing profits. Firms would then increase employment, which would not only increase their output, but it would also increase consumption due to the new labor that was hired to increase output. Although the rate of governmental receipts would be lower, gross governmental receipts would be expected to either remain steady or increase under this model due to the sheer
I believe that the real causes of shifts in aggregate demand are the four sources which are households (personal consumption), other firms (investment), government agencies (government purchases), and foreign markets (net exports) and aggregate demand immensely can be affected them . This because Demand is the relationship between the willingness to purchase a quantity of goods and sevices at a specific price and these four sources who determine this relationship.There are many actions that may cause the aggregate demand curve to shift. When the aggregate demand curve shifts to the left, the total quantity of goods and services demanded at any given price level falls. This can be thought of as the economy contracting. It’s noticed according
That is, the gross domestic product increases as a result of an increase in per capita income as the country experiences a technological progress which increases its productive efficiency. This is because such increase in productive efficiency increases capital and labor consumption. The second assumption is that the government does not engage in any trade as this will influence policy and change it into endogenous trade rather than exogenous trade. In addition, there should be no international trade (Agénor, 2004; Barro & Sala-i-Martin, 2004; Barro,
Also if there`s a decrease in supply or the expense to process these products increases, therefore putting pressure on the price of the goods. When supply decreases the demand doesn’t decrease that easily and companies have to increase their prices to make up for the profit lost. Below is a diagram showing what happens during cost push inflation when supply and prices increase. As seen from the diagram the supply curve (S0) met the demand curve at point Z, the equilibrium. Then supply increased and prices increased with it at point Y, the new equilibrium.
QUESTION 1 (a) SST (Sales and Service Tax) is a form of indirect taxation levied in Malaysia and single stage consumption tax. Sales Tax is imposed on consumers, collected by business enterprises and accountable to the Royal Malaysian Customs and Excise Department. The law governing the imposition of sales tax is the Sales Tax Act 1972 (Act 62) which takes effect from 29 February 1972. Income tax or real property gains tax on the contrary is a form of direct taxes as the taxpayer pays the taxes directly to the tax authorities. Hence, this tax not imposed on personal or professional services, sales of real property, or on sales of intangible property.
A low level of unemployment is one of the main macroeconomic goals of every country. This is because a low unemployment rate is a sign of improved health of an economy. Unemployment (or joblessness) is defined as people of working age who are without work, available for work and actively seeking employment . Unemployment rate is the number of people who are unemployed expressed as a percentage of the total labour force . Statistically, the number of unemployed people in 18-member Eurozone drop for about 22, 000 in March when compared to February.