A Tax Rebate, Which Is Expected to Be Offered in This

question 136

Multiple Choice

A tax rebate, which is expected to be offered in this and all future years, will

• A)have a small positive effect on consumption and aggregate demand.
• B)have no effect on consumption and aggregate demand.
• C)have a significant positive effect on consumption and aggregate demand, with aggregate demand growing by a multiple of the tax rebate.
• D)increase aggregate supply and aggregate demand.
• E)have a significant effect on aggregate supply, with firms expanding by a multiple of the increased tax take.

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Definitions:

Market Equilibrium

A market state where the supply of goods matches demand, with stable prices and quantities.

Area Representation

A system of electing representatives from specific geographical areas, typically used in legislative bodies.

Price

The expenditure necessary to secure a good or service.