Now, Congress steps in and insists that the policy be "deficit neutral" so that the government deficit will not be affected. In other words, taxes will decrease by an equivalent $50 billion so as to keep the deficit constant. What will be the effect on real GDP, again assuming no mitigating factors?

Now, Congress steps in and insists that the policy be "deficit neutral" so that the government deficit will not be affected. In other words, taxes will decrease by an equivalent $50 billion so as to keep the deficit constant. What will be the effect on real GDP, again assuming no mitigating factors?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter24: Fiscal Policy

Section: Chapter Questions

Problem 1P

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