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.

Question

Quizplus · Accepted Answer

A tax rebate typically increases disposable income for consumers, leading to an increase in consumption. This increase in consumption boosts aggregate demand. Moreover, through the multiplier effect, the initial increase in spending from the tax rebate can lead to a larger overall increase in aggregate demand, as the initial spending circulates through the economy.

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