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Question regarding the aggregate demand

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Reference no: EM131040077

1) Suppose that, in an effort to try to avoid a recession, the government implements a tax rebate program (effectively cutting taxes for households).

a) What would we expect this to do to aggregate demand? What component of AD (C, I, etc.) would the tax rebate impact most directly? Explain why.

b) Is this an example of the use of fiscal policy or monetary policy?

Reference no: EM131040077

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