Number of jobs created by this tax refund

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Presume the federal government gives every U.S. household a $5000 one-time federal income tax refund this year.

1. Describe the effect, if any, the refund might have on unemployment according to each of the following consumption theories:

a. Keynesian Consumption Theory

b. Permanent-Income Hypothesis

c. Life-Cycle Theory of Consumption

2. Which of the three consumption theories listed above that would predict the most number of jobs created by this tax refund?

Reference no: EM13685506

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