1. Describe two ways taxes and government spending (fiscalpolicy) are used by Ke

Question

1. Describe two ways taxes and government spending (fiscalpolicy) are used by Keynesian (demand side) conomics to change theeconomy. 2. Describe one way supply side economics uses fiscal policytaxes to change the economy. Keynesian is the same as demand sideeconomics. 1. Describe two ways taxes and government spending (fiscalpolicy) are used by Keynesian (demand side) conomics to change theeconomy. 2. Describe one way supply side economics uses fiscal policytaxes to change the economy. Keynesian is the same as demand sideeconomics.

Explanation / Answer

1. After 1929, the government called on a Keynesian economy tocorrect the problem of instability. Two ways taxes and governmentspending are used . One is during arecession governement should increase government spendingto keep the economy going. Another is the governement should placea decrease taxes to give consumers more disposableincome. 2. Fiscal policy uses supply side economics to influencemarket demand or demand side fiscal policy. A tax increase isa good example.

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