4. Suppose there is a permanent fall in private aggregate demand for a country’s output (a… 1 answer below »

4.     Suppose there is a permanent fall in private aggregate demand for a country’s output (a downward shift of the entire aggregate demand schedule). What is the effect on output? What government policy response would you recommend?

5.     Why does a temporary increase in government spending cause the current account to fall by a smaller amount than does a permanent increase in government spending?

 

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