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Reduce spending because lower taxes mean less government revenue.
Fiscal stimulus tax increase. The federal government provides fiscal stimulus when it increases spending cuts taxes or both to shore up households and businesses demand for goods and services during a recession. 20 jan 2021 5 35 pm ist. Borrow money i e increase government debt.
When the fiscal stimulus involves tax cuts the government has two options. An increase in aggregate demand leads to economic growth or so the theory goes. If the fiscal stimulus simply or merely means an increase in government expenditure then i am totally unconvinced.
Most commentators are of the view that with the emergence of a ratio below 1 the most effective policy to lift the ratio is by means of aggressive fiscal stimulus i e the lowering of taxes and increasing government outlays a policy of large government deficit. On december 28 the u s. House of representatives voted to pass a bill to increase the 600 stimulus checks to 2 000 with the bill receiving the needed two thirds majority of the members voting.
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