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Presume the federal government gives every U.S. household a $5000 one-time federal income tax refund this year.
1. Describe the effect, if any, the refund might have on unemployment according to each of the following consumption theories:
a. Keynesian Consumption Theory
b. Permanent-Income Hypothesis
c. Life-Cycle Theory of Consumption
2. Which of the three consumption theories listed above that would predict the most number of jobs created by this tax refund?
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