In the short-run framework, budget deficits should: Choose correct and explain why never be run since they slow economic growth over the long run. never be run since they crowd out investment in the short run. be run on a temporary basis whenever the economy is below potential output. be run on a permanent basis since they can always be financed by printing money.

Q: Will Increase in government spending financed by borrowing help promote a strong recovery from a…

A: A recession is a period of an economic downturn that is caused due to the depletion of aggregate…

Q: Because of automatic stabilisers, the government budget will tend toward deficit during a…

A: Automatic stabilizers are a type of fiscal policy used by the government to stabilize the economic…

Q: Based on this model, the budget deficit leads to in the level of investment and in the interest…

A: The budget is an estimate for the coming year's expenses and revenue level. The budget is made by…

Q: The notation is Y = GNP = national income C = consumption 1 = private investment G = government…

A: Balance of Current Account: The BCA is a component of a country's balance of payments, which is a…

Q: calculate the money growth rate required to finance the budget deficit of Rs. 10,000 in an economy.…

A: Given; Budget deficit= Rs. 10000 Income (Y) = Rs. 1,00,000 Nominal money supply (M) = Rs. 80,000…

Q: Ruritania's economy has been enjoying positive but slowing growth. The Ministry of Economics is…

A: we can place the options in the appropriate column according to weather it will most likely lead…

Q: Which of the below statements is INCORRECT about budget deficits and surpluses? Group of answer…

A: A budget surplus is when additional cash is leftover in a budget after costs are paid. A budget…

Q: a) Why can't the government run a budget deficit in a one- period macroeconomic model? b) Why are…

A: Budget refers to the legal document of the government which accounts for the revenue of the…

Q: The main way that are designed to stop inflation and eliminate large budget deficits. include trade…

A: Economic policies are the strategies, actions, and measures taken by governments, central banks, or…

Q: The government has the ability to influence the level of output in the short run using monetary and…

A: Active stabilization policy by the government can be defined as the policy to maintain economic…

Q: Which of the following is not true of deficits?   Supply-side policies contribute to budget…

A: Answer: Deficits: deficit refers to the difference between total spending and total revenue of the…

Q: The two ways in which deficit spending can impose a burden on future generations are: a)by requiring…

A: Deficit spending alludes to a fiscal policy wherein a government deliberately spends more money than…

Q: For the last 50 years or so, republicans and democrats at the national level have each favored…

A: The impact of a tax cut, Increase spending, Higher economic growth, Government borrowing, government…

Q: Which of the reasons given is often cited as a benefit of running a budget deficit? operating with a…

A: The difference between the total income and total expenditure of the government is known as a budget…

Q: Fiscal policy refers to  a) the spending and taxing policies used by the government to influence the…

A: Governments' economic policy encompasses taxation, budgeting, the money supply, and interest rates,…

Q: If the U.S. government's budget deficits are increasing aggregate demand, and the economy is…

A: The correct option is:c) the central bank might react with an expansionary monetary…

Q: long-run framework, budget surpluses: Select correct and explain why its correct should be run…

A: Inside the budgetry cycle, deficiency spending is the sum by which spending surpasses income…

Q: Which statement best explains why budget deficits may bring on a recession?   a) Large deficits…

A: A budget deficit arises when spending surpasses receipts; it might reflect a country's financial…

Q: Fiscal policy can affect the rental cost of capital. true or false?

A: Fiscal policy is the use of government spending and taxation by the government to influence the…

Q: The Focus box “Can a Budget Deficit Reduction Lead to an Output Expansion? Ireland in the 1980s”…

A: Ireland had a large budget deficit in 1981 and 1982.It means expenditure of ireland was more than…

Q: Answer the following questions: As you know, the US government has been running budget deficits for…

A: Budget shortfalls in the USA have varied across periods. Significant contributors to deficits…

Q: The Focus box “Can a Budget Deficit Reduction Lead to an Output Expansion? Ireland in the 1980s”…

A: 1) A budget deficit occurs when the government spending exceeds its tax revenue. A government may…

Q: In the long-run framework, budget surpluses: Choose the Correct and Explain why its correct should…

A: When the income tends to exceed the expenditures of an economy, there is an occurrence of budget…

Q: Identify how planned investment will change in each scenario.   In an effort to reduce constant…

A: To identify the change in planned investments.

Q: Given the following closed economy model: C = .8Yd + 800 I =  1000 G = 6000 T = .25Y + 100 Yf =…

A: At equilibrium, AD = AS Thus, Y = C+I+G Y = .8Y + 800 + 1000 + 6000 Y - 0.8Y = 7800 0.2Y = 7800 Y =…

Q: A government is facing a significant budget deficit due to high levels of public spending and…

A: Budget deficit is a scenario where government's spending exceeds its revenue in annual budget,…

Q: In an economy such as Canada's, absorbs some of the available for investment, driving the interest…

A: The policies related to the economy of Canada have been discussed.