Question: The economy has been sluggish so in an effort to
The economy has been sluggish, so in an effort to increase output in the short run, government officials have decided to cut taxes. They are considering two possible tax cuts of equal size in terms of lost revenue. The first would reduce for one year the taxeson people with income above the median. The second would cutfor one year the taxes on people with income below the median. Which change would shift the aggregate demand curve further to the right? Why?
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