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Aggregate demand curve after the refund

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Reference no: EM131251927

Suppose the economy is at a macroeconomic equilibrium as is shown on Slide 40 of the Attend section. The government decides to give every taxpayer a $500 tax refund.

a. What happens to the aggregate demand curve after the refund?

b. What happens to the price level after this change?

c. Is real wealth increased or decreased as a result of the refund?

Reference no: EM131251927

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