Suppose that Congress enacts a significant tax cut with the expectation that this action will stimulate aggregate demand and push up real GDP in the short run. In​ fact, however, neither real GDP nor the price level changes significantly as a result of the tax cut. This outcome can be explained by all of the​ following, except one. Which one of the following is the​ exception? A. Indirect crowding out. B. The Ricardian Equivalence Theorem. C. Automatic stabilizers. D. The​ Fed's contractionary monetary policy.
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Suppose that Congress enacts a significant tax cut with the expectation that this action will stimul...
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