How can tax cuts help revive the economy? Explain.
The economists hold up the fact that for an economy which wants to detain its economic crisis, it is of extreme importance that spending of the government (within that economy) is increased sharply. Failure to do so can make the economy face the slump for even longer periods of time. For the US economy, the rate of unemployment was feared to increase to more than 9 by the beginning of the year 2010 due to the lack of a stimulus plan. Also during the year 2009 and 2010, the loss on production was estimated to be more than two trillion Dollars which was calculated as the gap between the actual GDP and the potential GDP of the country. Pertaining to the reduction of the gap and to take the economy out of the crisis, the package of fiscal stimulus was observed as an effective way-out for the