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The stability of fiscal policy. (Blinder and Solow, 1973.) By definition, the budget deficit equals the rate of change of the amount of debt outstanding: δ(t)=?(t). Define d(t) to be the ratio of debt to output: d(t)=D(t)Y(t). Assume that Y(t) grows at a constant rate g>0.
(a) Suppose that the deficit-to-output ratio is constant: δ(t)Y(t)=a, where a>0.
(i) Find an expression for ?(t) in terms of a, g, and d(t).
its marginal costs are below total average costs. If it creates an additional watch where its average total costs rise -fall or stay the same.
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