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The government purchases because of the monetary multiplier. All 50 billion gets spent the first time around if the government buys things vs if there is 50 bullion in tax cutes only say, 45 billion will get spent because individuals save a portion of their income. The final effect will be greater if the government uses spending programs over tax cuts

the authorities could spend extra, the two subsidizing industries or initiating infrastructural projects to charm to workers, who then bypass out and spend their wages, growing to be a ripple result that helps different industries. the authorities could grant a tax harm, freeing funds to the deepest sector to apply because it sees extra healthful. it rather is often complicated if the deepest sector is wrongly spooked, on the grounds that they gained't spend the money if so, nonetheless the deepest sector is supposedly extra useful at allocating funds. Or the authorities could use financial coverage (interior the U. S., it rather is dealt with by using the Federal Reserve, which isn't quickly answerable to the authorities) to drop expenditures of pastime, efficiently reducing the value of money. this facilitates extra reasonable credit, that's meant to spur investment. those are the three person-friendly ideas a authorities has for financial stimulus.