Compare and contrast the economic effects of increasing spending versus reducing taxes?
I don't need direct answer if you can direct me where I can get the information that would be great.
2006-12-20 14:34:18 · 3 answers · asked by nileri_1 2 in Education & Reference ➔ Homework Help
This might help a little:
http://www.urban.org/url.cfm?ID=410261&renderforprint=1
2006-12-20 14:53:39 · answer #1 · answered by Tori 3 · 1⤊ 0⤋
Typically, a reduction in taxes favorably impacts by making more money available to be either saved, which tends to retire public debt, or be spent as discressionary income which has a multiplying effect. If you buy something then the business makes more money, paying more workers who inturn buy things..this is termed a multiplier effect.
If the government increasing spending, beyond the growth of the economy, then the government has to borrow money, recently this has been primarily from China for us, this causes inflation. That means that our money cannot buy as much stuff because it costs more. People have less discressionary income to spend or save and that means less money is multiplied.
2006-12-21 01:01:43 · answer #2 · answered by Mike C 3 · 0⤊ 0⤋
Well, all I know is that both will lead to a faster-paced economy that could potentially lead the country to an inflationary stage. I'm not completely sure on the differences between the two.
Good luck! :)
2006-12-20 22:53:37 · answer #3 · answered by brian chase's lover 3 · 0⤊ 0⤋