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Created with Fabric.js 1.4.5 Keynesian Supply Side vs prefer a smaller government and less intervention in the free market the government should intervene with fiscal and monetary stimuli producers and their willingness to create goods and services set the pace of economic growth believe that lower rates will induce workers to prefer work over leisure government would not lose total tax revenue because lower rates would be more than offset by a higher tax revenue base - due to greater employment and productivity refutes the notion held by some economists that lower wages can restore full employment poor business conditions may cause companies to reduce capital investment inadequate overall demand could lead to prolonged periods of high unemployment demand can falter Changes in aggregate demand, whether anticipated or unanticipated, have their greatest short-run effect on real output and employment, not on prices economic theory that holds that, by lowering taxes on corporations, government can stimulate investment in industry and thereby raise production, which will, in turn, bring down prices and control inflation the view that in the short run, especially during recessions, economic output is strongly influenced by aggregate demand concerned that the Fed may inadvertently stifle growth economic policy To promote economic growth, the Keynesian theory would lower taxes and raise government spending, increasing aggregate demand To slow economic growth, the Keynesian theory would raise taxes and lower government spending, decreasing aggregate demand To promote economic growth, the supply side theory would lower taxes, so people have more more spending money, increasing aggregate demand To slow economic growth, the supply side theory would raise taxes, so people have less spending money, decreasing aggregate demand
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