14. The economy is in a recession, the recessionary gap is large, and there is a budget...

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14. The economy is in a recession, the recessionary gap is large, and there is a budget deficit.

a. Do we know whether the budget deficit is structural or cyclical? Explain your answer.

b. Do we know whether automatic fiscal policy is increasing or decreasing the output gap? Explain your answer.

c. If a discretionary increase in government expenditure occurs, what happens to the structural deficit or surplus? Explain.

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Parkin Macroeconomics

ISBN: B0070OLVAC

10th Edition

Authors: Michael Parkin

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