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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

What is a government budget deficit? How does it affect interest rates, investment, and economic growth?

To determine

The Government deficit and its impact on the interest rate, Investment and economic growth of the economy.

Explanation

The Government makes the revenue from the taxes collected from the public. The government uses this revenue to make the government expenditures. When the expenditures of the government exceed the revenue of the government, there arises the government deficit.

Since the national savings is the summation of the private savings and the government savings, the government deficit leads to the reduction in the national savings...

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