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svetlana
1 month ago
11

a) How did consumers spend their 2008 tax cut (News, p. 237 in your textbook)? b) Does it matter what they spend it on, in terms

of impact on Aggregate Demand (AD). (Hint: Refer back to Chapter 10 on injections and leakages). Explain your answer and provide your rationale.
History
1 answer:
LenKa [1.8K]1 month ago
5 0

The responses are:

a. Many individuals used their tax exemptions to make purchases in the market, and a significant number invested in stocks.

b. This expenditure was significant as it aimed to rejuvenate the economy.

Explanation:

During the economic crisis, tax exemptions were provided to encourage individuals to utilize those funds, thereby aiding in the recovery of the market by purchasing goods in a market economy where prices had decreased, thereby stimulating demand.

As more individuals bought shares that had lost value, it led to their appreciation as the demand increased.

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