Budget Deficit Essay

Complete all questions listed below. Clearly label your answers 1. What impact would a change that shifts an economys production possibilities curve outward incur on the long run aggregate supply curve? It exit cause it to shift right. How ca-ca improvements in calculating machine technology stirred production possibilities and the long run aggregate supply curve? They have cut the cost of doing business and expanded our production capacity. These types of improvements enhance productiveness and shift the LRAS and SRAS curves to the right.2. Construct the AD, SRAS, and LRAS curves for an economy experiencing (a) full employment, (b) an economic boom, and (c) a recession. (Graphs idler be hand drawn or done by computer label all curves and axes clearly.)3. What is a reckon deficit? A piazza in which total government spending exceeds total government revenue enhancement during a specific time period, usually one year. How are budget deficits financed? Selling of bonds, borrowi ng from abroad, raising taxes, and selling of assets. Why do Keynesians consider that budget deficits will increase aggregate demand? Because they believe that twain fiscal and monetary policies affect aggregate demand.4. When output and employment slowed in early 2008, the Bush Administration and the Democratic Congress passed a statute law sending households a check for $600 for each adult (and $300 per child). These checks were financed by borrowing. Would a Keynesian favor this action? Yes, because Keynesian are in favor of government influence on the economy.