What is the primary economic argument made by those who prefer to use tax cuts to fight recessions?
Explanation
The choice between using government spending versus tax cuts as a fiscal policy tool often depends on one's philosophical view of the appropriate size and role of government.
Other questions
What is the definition of discretionary fiscal policy?
In the context of the AD-AS model, what is the primary objective of an expansionary fiscal policy?
If the government undertakes an expansionary fiscal policy with an MPC of 0.75, and its goal is to produce a $5 billion initial increase in spending, what size tax cut would be required?
What is the primary purpose of a contractionary fiscal policy?
What is a built-in stabilizer in an economy?
What does the standardized budget measure?
What is the primary reason for the recognition lag in fiscal policy?
What is the crowding-out effect?
What was the total public debt of the United States in 2007?
According to the ownership data for the 2007 U.S. public debt, what percentage was held by foreigners?
What is considered a primary substantive issue related to the public debt?
What was the interest payment on the total public debt in 2007?
The ratchet effect, in the context of fiscal policy, implies which of the following?
Which of the following is an example of a public investment that could offset the crowding-out effect of public debt?
If the government wants to reduce aggregate demand by $12 billion to fight inflation and the MPC is 0.75, by how much should it reduce government spending?
Which of the following is NOT a reason the text gives for the pro-cyclical fiscal policies of state and local governments?
According to the text, which type of tax system provides the most built-in stability for an economy?
What is a cyclical deficit?
In what year did the U.S. Federal government pass the Economic Stimulus Act to counter a potential recession?
What is the primary reason the text gives for why the large public debt does not threaten to bankrupt the Federal government?
If the government wants to reduce aggregate demand by $12 billion to fight inflation and the MPC is 0.75, what size tax increase is needed?
Which component of U.S. public debt is described as 'external'?
What is the administrative lag in fiscal policy?
What is a political business cycle?
Why might a tax cut be less effective at stimulating aggregate demand if households believe it is only temporary?
In 1992, the actual Federal budget deficit was 4.5 percent of GDP, while the standardized budget deficit was 2.9 percent of potential GDP. What does the difference between these two figures represent?
What are the three main options for an expansionary fiscal policy?
What is the operational lag in fiscal policy?
What was the total value of the Economic Stimulus Act of 2008?
How might a large public debt impair economic incentives?
What type of government securities are described as long-term and nonmarketable?
What is the primary effect of an expansionary fiscal policy if the Federal budget is initially balanced?
How do public-private complementarities potentially offset the crowding-out effect?
During which recent period did the U.S. Federal budget experience surpluses?
What is the economic argument against a constitutional amendment requiring the Federal government to balance its budget annually?
In 2007, what was the public debt per capita in the United States?
What impact does the public debt have on income distribution?
If fiscal policy is used to correct for an inflationary GDP gap of $12 billion in an economy with an MPC of 0.75, what is the required initial decrease in aggregate spending?
The Social Security trust fund surpluses are invested in what type of asset?
What is the relationship between a country's tax system and its built-in stability?
Which of these is NOT one of the main options for a contractionary fiscal policy?
In 2007, interest payments on the public debt as a percentage of GDP were approximately what?
If the government increases spending by $10 billion and the multiplier is 4, but the action is taken along an upward-sloping aggregate supply curve, what will happen to real GDP?
What are public-private complementarities in the context of public debt?
As of 2007, how was the U.S. public debt of $9.01 trillion divided between debt held by the public and debt held by Federal agencies and the Federal Reserve?
Which of these is the main tool of the Council of Economic Advisers (CEA)?
What does a government budget surplus represent?
Why are transfer payments like Social Security and welfare not included in the government purchases component (G) of GDP?
According to the text, how did the U.S. government respond fiscally to the economic slowdown and terrorist attacks of 2001?