Homework Help: macroeconomics

Posted by Benji on Saturday, October 4, 2008 at 8:19pm.

Assignment questions:

When the government reduces its budget deficit (reduces government purchases) does consumption rise or fall? Output rise or fall?

- I think output and consumption increase but I'm not sure.

When the government reduces the budget deficit by increasing taxes on household income what happens to the following: interest rate, national saving, investment, consumption, and output.

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