comptonalex comptonalex
  • 03-03-2016
  • Business
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What is the theory that government spending and tax cuts can raise demand called?

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rube
rube rube
  • 03-03-2016
Its part of a Keynesian economics.  . It might also be called the pump-priming theory. It is correct by the way especially if you use a strict definition of the word "can." Tax cuts will only raise demand if they went to people who will spend most of what is cut from their taxes.
hope that helps !!!!
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