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For both political and macroeconomic reasons, governments are often reluctant to run budget deficits. Here, we examine whether policy changes in G and T
For both political and macroeconomic reasons, governments are often reluctant to run budget deficits. Here, we examine whether policy changes in G and T that maintain a balanced budget are macroeconomically neutral Put another way, we examine whether it is possible to affect output through changes in G and T so that the government budget remains balanced. Using the following formula: Y = (1-0) (0 + 1 + 6G-07), where co= autonomous consumption and c = propensity to consume By how much does Y channge when G increases by one? 1-C (Properly format your expression using the tools in the palette. Hover over tools to see keyboard shortcuts. E.g., a subscript can be created with the character.) By how much does Y change when T increases by one? AY= (Property format your expression using the tools in the palette.) AY=
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