Analysis of Price Effect and Employment Effect of Government Tax Reduction

Under the influence of today's pandemic, it has led to stagnation production and business operations in various industries shutdown enterprises, bringing serious disasters global economy. In order mitigate loss, governments are adopting policies ensure economic development their countries, such as reducing taxes fees, issuing national bonds, etc. this paper, we will assume a closed economy use Keynesian model study effect government tax cuts on price level labor employment. Through rigorous logical analysis theoretical derivation is found that economy, if reduces taxes, employment country be increased accordingly, have restraining curb inflation. At same time, can allow formulate improve more scientifically, bring reference market, help enterprises adapt understand information make proper decisions.