Week11.docx - 1"Market Slump Helps Sell Tax Cuts...

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1) "Market Slump Helps Sell Tax Cuts Now." (Headline from fall 2000) Explain from the standpoint of Keynesian macroeconomic theory why the slump in the stock market that began inthe spring of 2000 help build support for Bush's tax cut proposal in his first year in office
2)The exchange rate of the $ has increased over 20% or more against the currencies of major US trading partners during the past year. Do you think the Fed welcomes continued strength in the exchange value of the $ at this time? Explain your answer carefully.

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