Tax cuts and increased income transfers have the same fiscal stimulus,dollar for dollar.
Like tax cuts,increased transfer payments do not increase injections dollar for dollar in the initial stage.Consumers will save some of their additional transfer payments or tax cuts; only the MPC part of the initial income will be injected into the spending stream.

Question

Quizplus · Accepted Answer

Both tax cuts and increased transfer payments have the same fiscal stimulus and do not increase injections dollar for dollar in the initial stage. Consumers may save some of the additional income received through transfer payments or tax cuts, and only the marginal propensity to consume (MPC) part of the initial income will be injected into the spending stream.

Tax Cuts and Increased Income Transfers Have the Same Fiscal