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A governments decision to increase its budget deficit as a proportion of the economys GDP will depend significantly upon whether the economys output gap is

"A government’s decision to increase its budget deficit as a proportion of the economy’s GDP will depend significantly upon whether the economy’s output gap is positive or negative. "


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The remark suggests that the status of the economy especially the output gapthe difference between actual and potential output influences the governments choice to grow its budget deficit When the pro... blur-text-image

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