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5. M. Friedman argued the federal government should balance its budget only when output is beyond potential. Friedman's statement can be written as a fiscal
5. M. Friedman argued the federal government should balance its budget only when output is beyond potential. Friedman's statement can be written as a fiscal policy rule: (G - T) < 0, if and only if Y > Yp. Explain why this rule stabilizes the economy. Explain why the following rule, if Y < Yp then (G - T) < 0, destabilizes the economy. Use any and all appropriate mathematics, graphs and words.
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