Question

1). On the other hand, tax cuts have a lower multiplier effect than increases in government spending. This means that we get more economic stimulus from a given dollar value of government spending than the same dollar value in tax cuts.

The tradeoff here is between more efficiency (with tax cuts) vs. more economic stimulus (with government spending).  Differences of opinion on this matter are cause for heated political debate and overblown political rhetoric.

So what do you think? Do you prefer economic stimulus from tax cuts or increases in government expenditure?

Answer 1

I would like to prefer economic stimulus from tax rather than incraese in government spending, because reduction in tax rate is quick and taxpayers immediately have more money in their bank balance or hand and companies often begin investing before the cuts have taken effect while the impact of infrastructure or other spending takes much longer, even years, to work through the economy. But these two olicies are better decision for economic growth. Moreover, tax cut is easily identified and its benefits of saving more money take advantage in increasing consumption level of individual.