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Suppose that households and businesses increase autonomous expenditures,driving output well above potential.Describe,in detail,how monetary policy might react to minimize the increase in inflation.
Deadweight Loss
A cost to society created by market inefficiency, which occurs when supply and demand are out of equilibrium.
Ability-To-Pay Principle
A principle in taxation that holds that taxes should be levied according to an individual's or entity's capacity to pay.
Financial Burden
A financial burden is a substantial monetary load that may come in the form of debt, high costs, or other financial obligations that affect an individual's or entity's budget or financial well-being.
Average Tax Rate
The ratio of the total amount of taxes paid to the total income earned, representing the percentage of income paid in taxes.
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