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For an economy operating in a state of short-run equilibrium, the government needs extra funds to nance its excessive expenditures. For this reason, it decided

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For an economy operating in a state of short-run equilibrium, the government needs extra funds to nance its excessive expenditures. For this reason, it decided that it must achieve a budget surplus to be able to nance its excessive expenditures, and it succeeded to achieve a surplus in its budget. a. Explain what is meant by a Budget Surplus and when does it occur in an economy? What is the effect of such a decision (achieving a budget surplus) on the market of Loanable Funds? Explain your answer in words and graph. b. Explain the effect of this decision on the market economy using AD-AS model. Draw graph of AD-AS and explain effect in words c. Is \"achieving a budget surplus\" a good decision to help this government in nancing its excessive expenditures? If yes, explain why and how this is a good decision and if no, explain what could you suggest as a better alternative decision or policy to be followed by the government to achieve this objective

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