Question
Reducing fiscal deficit leaves more saving available for investment, so private investment must increase. Do you agree or disagree with this statement? Explain your answer
Reducing fiscal deficit leaves more saving available for investment, so private investment must increase. Do you agree or disagree with this statement? Explain your answer in the context of the IS-LM model. (Hint: Consider two cases. In the first case, the LM curve is horizontal; in the second case, the LM curve is upward sloping.)
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Introductory Econometrics A Modern Approach
Authors: Jeffrey M. Wooldridge
4th edition
978-0324581621, 324581629, 324660545, 978-0324660548
