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Part 1: For each of the following scenarios, identify: a) the desired effect on aggregate demand b) the appropriate tax policy c) the appropriate action

Part 1: For each of the following scenarios, identify: a) the desired effect on aggregate demand b) the appropriate tax policy c) the appropriate action on government spending d) the effect on the federal budget balance and e) the effect on the national debt.

1. National unemployment rate rises to 12 percent. 2. Inflation rate increases to 14 percent per year.

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