COVID-19 has sent the economy of Classica into recession. The finance ministry has advised the government to lower stamp duty and other purchase service charges for those wanting to buy existing...

• COVID-19 has sent the economy of Classica into recession. The finance ministry has advised the government to lower stamp duty and other purchase service charges for those wanting to buy existing houses in order to boost economic growth. As well, the finance ministry wants the government to also cut company taxes as this will lead to firms increasing their level of investment in the economy. The President of Classica has asked you, as her chief economic advisor, for your views. In particular, she wishes to know the following:

Would a cut in stamp duty and other purchase charges on the purchase of existing houses really boost the economy? Your advise on this is ____________________ (provide your answer and justification on both the immediate and future impact.