Now, Congress steps in and insists that the policy be "deficit neutral" so that the government deficit will not be affected. In other words, taxes will decrease by an equivalent $50 billion so as to keep the deficit constant. What will be the effect on real GDP, again assuming no mitigating factors?
Now, Congress steps in and insists that the policy be "deficit neutral" so that the government deficit will not be affected. In other words, taxes will decrease by an equivalent $50 billion so as to keep the deficit constant. What will be the effect on real GDP, again assuming no mitigating factors?
Chapter11: Fiscal Policy
Section: Chapter Questions
Problem 8SQP
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