How Can Tax Cuts Help Revive the Economy - Essay Example

How can tax cuts help revive the economy? Explain. ID Lecturer Tax cuts can help revive the company through effective changes that can take place within the government spending regions which are in direct response to economic changes and shifts. This is related to the discretionary fiscal policy which amounts to periods within recession where the government could enhance the highway spending so that it could stimulate aggregate demand. Since it is not mandated by law and is not automatic, the discretionary fiscal policy does bring about measures that help in reviving the economy.

Also, the role of the expansionary fiscal policy is severely important because it facilitates the increase in government purchases over a period of time as well as a decrease in serious taxes for the sake of the people. The expansionary fiscal policy corrects the issues which have engulfed the business-cycle contraction regimes and save on the taxes count in essence. Similarly, the tax multiplier realizes the notion that an autonomous change within the taxes would not result in an equal chance in the aggregate expenditures which drastically cut down on the taxes bit.

The economy can suffer immensely if there are a number of taxes which are imposed on it from different regions and zones (Sexton, 2005). The need is to pull up the socks and find the best mechanism forward to link up the ailing economic zones with the aggregate demand issues which remain very quintessential under such circumstances. The aggregate demand is usually a good indicator of how things accumulate within an economic setting and how these shall mean success for the business realms. This aggregate demand takes care of the total demand that is present for the final goods and services which are a part of the economy where taxes rule the roost under a certain price level and time specifications.

The aggregate demand also remains supremely important because it comprises the goods and services which shall be purchased at all possible price equations. Hence the manner in which the tax cuts help revive the economy is severely different and varied in their forms, manifestations, and end effects – all of which bring about a sense of security and understanding within the minds of the people who bear such taxes at the end of the day. The tax cuts usually help revive the economy because the people start expecting a lot from the domains of the government.

What is needed here is a sound vision to understand how the government shapes up its reactions, as this is the need of the hour for the sake of the people at large. The tax cuts facilitate the linking process of fiscal issues with the people so that the economy could be bolstered time and again. In essence, it is only natural to think of elements like aggregate demand, expansionary and discretionary fiscal policy realms, and the tax multiplier to have a wholesome effect for the sake of the economy from a strategic perspective.

This will help resolve the outstanding disputes amongst the government and bring an upheaval in the economy all said and done.