This kind of financing is a more expansionary way but more inflationary. This means that the government buys back some of its bonds, and this will to interest rate decrease and private borrowing and spending will increase. Therefore, the increase in private spending offsets the contractionary fiscal policy. Liberals recommend government spending increase during demand-pull inflation because there are many social needs to be supported. Conservatives advocate that public sector is too large and inefficient therefore they recommend tax cuts during recessions and reductions in government spending during demand inflation.
Net taxes are taxes minus subsidies and transfers.
That means unemployment compensation payments rise as the economy slums into a recession and vice verse as the economy expands. The interest rate declines because government finances budget deficit by government borrowing and this will compete with the private sector in terms of borrowing money. Because of this, aggregate demand increases by less than the amount of the increase in government spending. Actions taken by the private sector will offset government spending actions. That is the way private sector will spend their money cancel out government actions.