Let me know if this helps. I'm just a fan of the thread. Good luck.

Link 1:

Ans) Discretionary fiscal policies based on overestimates of the natural rate of unemployment cause the aggregate demand curve to shift too far to the LEFT, resulting in a CONTRACTIONARY gap. In the long run, the short-run aggregate supply curve SHIFTS TO THE RIGHT and real GDP will be back to the long run value GRAPH C

Link 2:

1.In an expansion, holding everything else constant, a previously existing budget deficit will automatically (Decrease / Increase), partly because taxes (Decrease / Increase)


There are several important philosophies regarding budget balances. One way in which they differ is in terms of the time span over which the budget should be balanced. Another difference among budget philosophies involves whether the budget balance is as important as other economic goals.

Which of the following budget philosophies advocates keeping the budget in balance every year, except during wartime?

  1. cyclically balanced budget
  2. Functional finance
  3. Annually balanced budget A major problem with the implementation of this philosophy is that it

  4. Relies upon government officials to budget for surpluses during boom times in order to cover deficits during recessions

  5. Magnifies business cycle fluctuations

  6. Can allow the national debt to burgeon with chronic deficits


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