In Short -- Adilbrand Noblesword's Hall of Warriors

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Date Posted: 22:03:25 03/29/04 Mon
Author: Adilbrand
Subject: In Short
In reply to: Adilbrand 's message, "Bolstering the economy with a tax cut? Yep." on 21:42:08 03/29/04 Mon

If the consumers HAVE more money, then they will spend/save more money (depending on their marginal propensity to consume). Both consuming and saving boosts the economy. Thus, a tax cut does boost the economy.

On the other side of the coin, it could also drive inflation up, or lower unemployment too much, if the tax cuts are too much, but that is a whole other issue, and one I don't think is looming at present. Tax hikes often raise unemployment, which helps create disinflation, which is a decrease in the rate of inflation. Again, something that isn't really looming on the horizon.

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Replies:

Re: Bolstering the economy with a tax cut? Yep. -- mt. healthy mountaineer, 22:04:46 03/29/04 Mon

That all makes sense! Thanks! -- Adilbrand, 22:17:36 03/29/04 Mon