The government has the power to tax

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The government has the power to tax, which gives the government greater control over its revenue. Thus by increasing or decreasing taxes, the government affects households' level of disposable income. A decrease in taxes will allow more disposable income for families. If families are able to spend more it generates the economy. Much like what we will see during Black Friday shopping and the Christmas holidays. The government also has the ability to print more money. Just as raising taxes has potential economic consequences (in the form of higher inflation) as well as political consequences.So in essence both have a direct impact on the economy, but I feel government increase spending is needful in order to help put money in the pocket's of consumers. However, too much spending can undermine economic growth.

Reference no: EM13888291

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