As the baby boomers retire, spending on Social Security benefits is rising. Assume that (1) the government
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As the baby boomers retire, spending on Social Security benefits is rising. Assume that (1) the government— which is already running a budget deficit—pays for the increased benefits with further borrowing; (2) the additional Social Security benefits are spent by households; (3) there are no shifts in the labor supply or labor demand curves. With no other change in policy,what would you expect to happen to each of the following variables?
a. The government’s budget deficit
b. The interest rate
c. Consumption spending
d. Planned investment spending
e. Total output
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a Government budget deficit would increase b Governmen...View the full answer
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Related Book For 
Macroeconomics Principles and Applications
ISBN: 978-1111822354
6th edition
Authors: Robert E. Hall, Marc Lieberman
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