Suppose the federal government gives taxpayers a tax rebate financed by borrowing.If taxpayers use the tax rebate to pay off their debts,total spending will:

Question

Quizplus · Accepted Answer

If taxpayers use the tax rebate to pay off their debts instead of spending it, the immediate effect on total spending is neutral, thus remaining unchanged. The rebate does not directly increase consumption or investment spending.

Suppose the Federal Government Gives Taxpayers a Tax Rebate Financed