Author Question: Some economists argue that the federal government should normally run a deficit at potential GDP, ... (Read 60 times)

olgavictoria · **on:** Jun 29, 2018

Some economists argue that the federal government should normally run a deficit at potential GDP, with the borrowed funds applied to

A) health care costs. B) social security benefits.
C) investment goods. D) consumption goods.

Question 2

The nation of Hyperbole is in a recession, and the government decides to increase taxes and reduce government spending to reduce the growing deficit. This will ________ aggregate demand and will likely ________ real GDP and employment.

A) decrease; decrease B) decrease; increase C) increase; decrease D) increase; increase