Explain spending caps set by the Budget Enforcement Act. What ...

[laurencescou]

Explain spending caps set by the Budget Enforcement Act.
 
  What will be an ideal response?

Question 2

Let  represent labor's share of total output. The Solow residual is, therefore, represented by
 
  A) gy.
  B) gA.
  C) gK.
  D) gN.
  E) 1/.

[macmac]

Answer to Question 1

The Budget Enforcement Act imposed constrains on spending. These constraints, called spending caps, were set on discretionary spending for the following five years. These caps were set in such a way as to require small but steady decrease in discretionary spending (in real terms). Explicit provisions were made for emergencies.

Answer to Question 2

B

[laurencescou]

Thank you

[macmac]

Happy to help you