Final answer:
The benefit to consumers from tax cuts or increased government spending depends on the economic context. Tax cuts can be beneficial in a recession by increasing AD, but can cause inflation if the economy is at full employment. Government spending stimulates the economy but must be balanced with funding sources to manage the deficit.
Step-by-step explanation:
Whether consumers would benefit more from a reduction in taxes or an increase in government spending relies on various economic conditions and policy goals. During a recession, when the economy is not at full employment, tax cuts can be beneficial in shifting the Aggregate Demand (AD) curve to the right, which can help in leading the economy out of the recession. However, if the economy is performing well and is close to or at full employment, additional tax cuts could lead to inflationary pressures with little gain to GDP, as Aggregate Demand may be pushed too far to the right.
On the other hand, government spending can also stimulate economic activity, but it depends on what the spending targets. For example, investment in infrastructure can create jobs and improve long-term economic efficiency, but spending also needs to be financed, potentially through higher taxes or increased borrowing, which can increase the federal budget deficit.
Economists' opinions on whether they favor tax cuts or oppose them are mixed and largely dependent on the timing relative to the economic cycle, the accompanying changes to government spending, and the potential impact on inflation and GDP growth.