Why did the tax rebate of $78 billion in 2008 have few net stimulus benefits?
A) Consumers overspent the rebate and fell into debt.
B) Consumers used much of the rebate to pay off existing debt.
C) Consumers spent the money on frivolous items that did not have a multiplier effect.
D) Consumers decided to save all of their rebate money.

Question

Quizplus · Accepted Answer

The tax rebate of $78 billion in 2008 had few net stimulus benefits because consumers used much of the rebate to pay off existing debt rather than spending it on new goods and services. This means that while the rebate did help some consumers reduce their debt burden, it did not stimulate significant new economic activity, as the money was not being spent on new purchases or investments.

Why Did the Tax Rebate of $78 Billion in 2008