Principles of Economics 2e
Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
Textbook Question
Chapter 25, Problem 2SCQ

In a Keynesian framework, using an AD/AS diagram, which of the following government policy choices offer a possible solution to recession? Which offer a possible solution to Inflation?

  1. A tax Increase on consumer income.
  2. A surge in military spending.
  3. A reduction in (axes for businesses that Increase investment.
  4. A major Increase in what the U.S. government spends on healthcare.

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Students have asked these similar questions
In a Keynesian economy, please show and explain how would reducing marginal tax rates affect income and price levels in the name of AD-AS model.
In the Keynesian model, which of the following events lead to an increase in aggregate demand? (This is a multiple answer question. One of more options may be correct)   a. An increase in the sales tax   b. A new infrastructure project by the Federal government   c. An increase in value of the Euro relative to the US-Dollar   d. A drop in business confidence.
The Keynesian view of the AD/AS model states that when beginning from potential output equilibrium, any increase in AD will :
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