5. (LO 2, 3) Suppose that a federal election is called at a time when the economy...
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5. (LO 2, 3) Suppose that a federal election is called at a time when the economy is experiencing a recessionary gap and there is a budget deficit. The leader of Party A promises, if elected, to immediately balance the budget by slashing government spending. The leader of Party B promises, if elected, to stimulate the economy with a tax decrease. What would be the effect of each party’s proposed policy on each of the following?
a) The level of GDP
b) The level of NTR
c) The level of unemployment
d) The budget deficit
e) The price level
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