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Question: Suppose that the Federal Government announced a tax rebate of $500 for all individuals filing singly and $1000 for all families filing jointly or as head of household in the upcoming tax year. Further, suppose that the Government budget included a broad based reduction in Government spending on goods and services, whose total amount was equal to the total amount of the tax rebates. What would be the overall impact on AD of these policy changes or would the policy change effects completely cancel each other out?

Explain your answer briefly but concise to the point

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M93116341

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