The economy is growing slowly, the inflationary gap is large, and there is a budget deficit. a.
Question:
a. Do we know whether the budget deficit is structural or cyclical? Explain your answer.
b. Do we know whether automatic stabilizers are increasing or decreasing aggregate demand? Explain your answer.
c. If a discretionary decrease in government expenditure occurs, what happens to the structural budget balance? Explain your answer.
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a The economy is at an above fullemployment equilibrium because there is an i...View the full answer
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Related Book For
Macroeconomics Canada in the Global Environment
ISBN: 978-0321778109
8th edition
Authors: Michael Parkin, Robin Bade
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