Chapter Checkpoint
Study Plan Problems and Applications
Suppose that in an economy, investment is $400 billion, saving is $400 billion, tax revenues are $500 billion, exports are $300 billion, and imports are $200 billion. Calculate government expenditure and the government’s budget balance.
Classify the following items as automatic fiscal policy actions, discretionary fiscal policy actions, or neither.
An increase in expenditure on homeland security
An increase in unemployment benefits paid during a recession
Decreased expenditures on national defense ...
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