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Basically pump priming by the government can help stimulate the economy. Pump priming is governmental deficit spending. That concept has been the basics of all stimulus spending ideas. It can come from tax refunds or direct expenditures by the government, but in either case it is borrowing that does it.Milton Freedman, the champion of the Monetarists School of Economics, basically proved that it was monetary theory, changes in the money supply, that was the only way to affect the economy. Pump priming was false. Read more: http://wiki.answers.com/Q/How_do_reductions_in_government_spending_affect_the_economy#ixzz18QvUW6VF
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