Banks create money when they:

Raising taxes typically reduces disposable income for consumers and businesses, potentially leading to lower overall demand in the economy. This action may further exacerbate economic downturns rather than restore equilibrium below full employment, as it can dampen consumption and investment.

Cutting government spending is aimed at reducing fiscal deficits and can lead to a more balanced budget. By reducing expenditures, the government can help to stabilize the economy, allowing for a shift in resources toward more productive private sector uses, which can enhance overall economic growth and restore equilibrium.

Increasing the reserve ratio requires banks to hold a greater percentage of deposits as reserves, which reduces their ability to lend. This monetary policy can result in decreased liquidity in the economy, further hindering growth and investment. It is not a direct fiscal policy tool and is less effective in addressing issues of below full employment.