Macroeconomics 12th Edition by Michael Parkin

Exercise 10

Use the following news clip and fact to work the Problem
Senate Approves Obama Tax Cut Plan
The U.S. Senate has passed legislation extending Bush-era tax cuts for middle-class Americans earning up to $250,000 per year.
Fact : Middle and low-income earners spend almost all their disposable incomes. High-income earners save a significant part of their disposable incomes.
What would have a larger effect on aggregate demand: extending the Bush-era tax cuts to everyone; extending them for middle-class only; or extending them for high-income earners only How would each alternative compare with no tax cuts but an equivalent increase in government expenditure