Economicsn response to the Covid-19 pandemic, theCanadian government responded with aneconomic stimulus package that increasedgovernment expenditures. One result of this hasbeen that Canada's combined Federal andProvincial debt rose from 65% of GDP at thebeginning of the pandemic in 2020 to 92% of GDPin 2021.a) Does the deficit-financed stimulus packageimply a redistribution between current and futureworkers? Explain your answer.b) Is there a way that workers can offset thiseffect? Explain your answer.c) Suppose that from now on the Federal andProvincial governments run balanced budgets andthat the nominal interest rate on government debtis 2% per annum. If inflation is 2% per annum andreal GDP grows at 3% per annum, roughly whenwill the debt-GDP ratio return to its pre-pandemiclevel?

a)There would be redistribution of income between current and future workers,because debt was for…

Economics n response to the Covid-19 pandemic, the Canadian government responded with an economic stimulus package that increased government expenditures. One result of this has been that Canada's combined Federal and Provincial debt rose from 65% of GDP at the beginning of the pandemic in 2020 to 92% of GDP in 2021. a D . thh. deficit Sin

Economics n response to the Covid-19 pandemic, the Canadian government responded with an economic stimulus package that increased government expenditures. One result of this has been that Canada's combined Federal and Provincial debt rose from 65% of GDP at the beginning of the pandemic in 2020 to 92% of GDP in 2021. a D . thh. deficit Sin

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section: Chapter Questions

Problem 1DQ

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