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Budget deficit or surplus vary over the business cycle
One alternative to balancing the budget annually or cyclically is to produce a government budget that would be balanced if the economy were at potential output. Given the cyclical nature of government tax revenues and spending, how would the resulting budget deficit or surplus vary over the business cycle?
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There are 10 identical firms that have the common cost function c(y) = y 2 + 9. The industry demand function is given by X (P) = 200/
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Assume if the inflation rate is 5percent is this still acceptable. Provide quantitative justification for your answer.
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