Question

Why government spending may give bigger boost to the economy than tax cuts?

Short answer please.

Answer 1

Solution:-Here we are discussing why government spending may give bigger boost to the economy than tax cuts,the most significant reasons are tax cuts have less of an impact on the economy than governmentspending because some of the tax cuts is added to saving and iswithdrawn from the economy. A change in taxes has less of a direct impacton income, employment, and output than an equal change in governmentspending. More government spending leads to a higher increase in GDPwhen compared to the same reduction in taxes.