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[Solution Library] Suppose that Congress enacts a significant tax cut with the expectation that this action will stimulate aggregate demand and push up real

Question: 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. However, neither real national income nor the price level changes significantly following the tax cut. What might account for this outcome? Please explain. [20 points]

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