Question

The standard view in economics is that tax cuts without​ ________ will​ ________ the budget deficit resulting in​ ________.

Answer 1

The standard view in economics is that tax cuts without SPENDING CUTS will INCREASE the budget deficit resulting in CROWDING OUT INVESTMENT. When a government lowers tax without minimizing its spending, it leads to crowding out investment effect, which is a situation in which increased interest rates leads to a decrease in private investment spending in such a way that it takes color out of the initial increase of total investment spending.