Effect of a tax cut on equilibrium consumption and GDP

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  By the time it has an effect, the recession may very well be over and a boom going on -- so that instead of stabilizing the economy, the tax cut makes it less stable.

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  By the time it has an effect, the recession may very well be over and a boom going on -- so that instead of stabilizing the economy, the tax cut makes it less stable. Automatic stabilizers can act in a much quicker and more timely fashion.