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Question
The government has decided to give every person in the U.S. a $5 coupon that they can use at the grocery store to purchase their choice of cheese. We would expect this policy to lead to
A) an increase in aggregate demand equivalent to the full impact of all of the coupons redeemable.
B) no increase in aggregate demand due to the Ricardian equivalence theorem.
C) no increase in aggregate demand because there would be no direct expenditure offset.
D) an increase in aggregate demand but not equivalent to the full impact of all of the coupons redeemed due to some direct expenditure offset.
Answer
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