Which of the following fiscal policy changes would have a larger overall negative impact on RGDP and AD? Discuss your answer in a paragraph or two with credible logics and analysis.
1. A program of tax hike, distributed uniformly across the households earning over the $300K annually filing tax returns, amounting to $85 billion in the total tax hikes.
2. An $85 billion sequester that went into effect on the March 1, 2013. This was an across-the-board spending cut in federal government's various existing services and programs, including the maintenance of major infrastructures and the aviation traffic control systems.
Suppose you may also use the AD-AS diagram as part of your analysis, but not required. However, explaining the answer with the concept of multiplier effects for these two alternative options is the right way to address this question.