Solved: In addition to praising aggressive monetary policy, the 2004 Economic Report of

Chapter 0, Problem 4

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QUESTION:

In addition to praising aggressive monetary policy, the 2004 Economic Report of the President says that tax cuts can boost economic activity by raising after-tax income and enhancing incentives to work, save, and invest. Which part of the report is a Keynesian statement and which part is not? Explain your answer.

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QUESTION:

In addition to praising aggressive monetary policy, the 2004 Economic Report of the President says that tax cuts can boost economic activity by raising after-tax income and enhancing incentives to work, save, and invest. Which part of the report is a Keynesian statement and which part is not? Explain your answer.

ANSWER:

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The fiscal policy is promoted by Keynes, where the tax and government spending is used to promote economic growth.

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