How does the two variables differ in terms of their effect on GDP?
Government and Fiscal Policy and Socialist Economies in Transition
Please answer following questions:
- What is the difference between government expenditures and government purchases? How do the two variables differ in terms of their effect on GDP? Answer:
- Suppose an economy has an inflationary gap. How does the government’s actual budget deficit or surplus compare to the deficit or surplus it would have at potential output? Answer:
- Suppose the president was given the authority to increase or decrease federal spending by as much as $100 billion in order to stabilize economic activity. Do you think this would tend to make the economy more or less stable? Answer:
