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Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985

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BuyFindarrow_forward

Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985
Textbook Problem

Explain how reducing a government budget deficit makes future generations better off. What fiscal policy might improve the lives of future generations more than reducing a government budget deficit?

To determine

Budget deficit, fiscal policy and its importance.

Explanation

Reducing the budget deficit increases the national savings, which causes the real interest rate to fall and investment to rise. This increase in investment over time leads to a larger stock of capital that raises labor productivity, real wages and the economy’s production of goods and services...

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