A tax decrease has more of an impact on income, employment, and output than does an equivalent increase in government spending.

Question

Quizplus · Accepted Answer

An increase in government spending typically has a more immediate and direct impact on income, employment, and output because it directly injects money into the economy, whereas a tax decrease relies on individuals and businesses to spend their increased after-tax income for its effects to be felt.

A Tax Decrease Has More of an Impact on Income