The difference in stimulus provided by government spending versus tax cuts is caused by the fact that:
A) people don't respond to tax policy as greatly as they do to as spending policy.
B) the government is able to target spending in high-need areas of the economy.
C) tax cuts take longer to implement legislatively.
D) only a fraction of tax cuts are spent immediately, while the full amount of government spending immediately makes it to the economy.

Question

Quizplus · Accepted Answer

Tax cuts often result in individuals saving or investing the money, rather than immediately injecting it into the economy. In contrast, government spending immediately puts money into circulation through the purchase of goods and services, providing a more immediate stimulus.

The Difference in Stimulus Provided by Government Spending Versus Tax