When fiscal policy is done through tax cuts instead of spending increases:
A) the resulting fiscal stimulus will be spent by the private sector.
B) there are likely to be many "bridges to nowhere."
C) the resulting spending won't pass the cost-benefit test.
D) the resulting fiscal stimulus will be spent by the government.

Question

Quizplus · Accepted Answer

When fiscal policy is done through tax cuts, individuals and businesses have more disposable income which they are likely to spend or invest in the private sector, thus providing a fiscal stimulus to the economy.

When Fiscal Policy Is Done Through Tax Cuts Instead of Spending