Other things equal,will a temporary individual tax rebate or a permanent individual tax rebate provide the largest increase in aggregate demand?
A) a temporary tax rebate
B) a permanent tax rebate
C) They will both produce the same amount of stimulus.
D) Neither will provide any stimulus.

Question

Quizplus · Accepted Answer

A permanent individual tax rebate is likely to provide a larger increase in aggregate demand because it permanently increases consumers' disposable income, leading to sustained higher spending. In contrast, a temporary tax rebate might lead to a more cautious increase in spending or saving instead, as individuals anticipate the rebate's end.

Other Things Equal,will a Temporary Individual Tax Rebate or a Permanent