Now that you have learned about economic indicators and how the government influences the economy through fiscal policy, watch this video about a fiscal policy that has come to be known as supply side economics.
Using what you know, what is your prediction for whether tax cuts stimulate economic growth?
While it is not possible to give a definitive answer because there are so many variables that influence an economy, data indicates that it does not work because the money saved by cutting taxes for businesses and the wealthiest individuals is not all injected back into the economy and leaves governments with budget deficits. As you read in the opening case about Liz Truss, the unsuccessful former Prime Minister of the United Kingdom, people and markets may not react positively to significant tax cuts that are not accompanied by ways to address the loss of revenue.