Fiscal stimulus can boost economic activity from "summary" of The General Theory of Employment, Interest, and Money by John Maynard Keynes
In times of economic downturn, when private investment is low and unemployment is high, government intervention through fiscal stimulus can play a crucial role in boosting economic activity. By increasing government spending or cutting taxes, fiscal policy can stimulate aggregate demand, leading to increased production, employment, and overall economic growth.
When businesses are hesitant to invest due to uncertain market conditions or lack of consumer demand, government spending can fill the gap by creating new projects and jobs. This injection of funds into the economy can have a multiplier effect, as the recipients of government spending will in turn spend more, creating a ripple effect of increased consumption and economic activity.
Similarly, tax cuts can put more mon...
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