We, as a country, turned toward Keynes in 2009 with the American Recovery and Re

Question

We, as a country, turned toward Keynes in 2009 with the American Recovery and Reinvestment Act (ARRA) to increase aggregate demand from government spending to try to get us out of our recession. You can see ARRA projects as you enter Bidwell Park, see the new roundabouts on East Ave, and many improvements in parks and roads around our area. But, not everyone agrees this was a good idea.

Read "The Supply-Side Solution" and "Arthur Laffer on Stimulus." (from the WALLSTREET JOURNAL) Please number your answers to these numbered questions. You MUST answer all thoroughly and thoughtfully.

1. According to Laffer, why won't the stimulus package help our economy? Do you agree/disagree? Explain why using a quote from the article AND your textbook to prove your point.

2. According to the Wall Street Journal article, what's been given a bad reputation? Why might they have a point (pay close attention to the chapter's discussion of the shifting out of the AS curve)? Given what the text says, do you believe we need more tax relief? How would that help our economy?

Explanation / Answer

1)

2)

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