A country is experiencing a severe economic downturn with high unemployment and falling consumer spending. In response, its government passes a large spending bill to fund new infrastructure projects and simultaneously issues a one-time tax rebate to all households. Assuming the government's tax revenues were just covering its expenses before these new policies, what is the most likely immediate impact on the government's finances?
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Introduction to Macroeconomics Course
Ch.5 Macroeconomic policy: Inflation and unemployment - The Economy 2.0 Macroeconomics @ CORE Econ
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Ch.6 The financial sector: Debt, money, and financial markets - The Economy 2.0 Macroeconomics @ CORE Econ
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A country is experiencing a severe economic downturn with high unemployment and falling consumer spending. In response, its government passes a large spending bill to fund new infrastructure projects and simultaneously issues a one-time tax rebate to all households. Assuming the government's tax revenues were just covering its expenses before these new policies, what is the most likely immediate impact on the government's finances?
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