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Author Question: Wars of attrition arise in which of the following contexts? A) fiscal policy B) deficit ... (Read 246 times)

D2AR0N

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on: Jun 30, 2018
Wars of attrition arise in which of the following contexts?
 
  A) fiscal policy
  B) deficit reduction
  C) hyperinflation
  D) all of above
  E) A and B

Question 2

Suppose policy makers pass a budget that results in an increase in the budget deficit. Also assume that this fiscal policy action results in a reduction in the saving rate. To what extent will this reduction in the saving rate cause permanent changes in the rate of growth of output per worker? Explain.
 
  What will be an ideal response?


Kaytorgator

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Reply #1 on: Jun 30, 2018
Answer to Question 1

D

Answer to Question 2

A budget that causes an increase in the budget deficit will cause a reduction in the saving rate. Reductions in the saving rate will only temporarily affect the growth rates of Y and Y/N. Once the new balanced growth equilibrium is achieved, the growth rates of Y and Y/N will return to their original levels.


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D2AR0N

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Reply #2 on: Jun 30, 2018
Correct answers!


Kaytorgator

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Reply #3 on: Jun 30, 2018
Great! Please up vote :D


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