Business, 25.06.2019 08:50, Reaksomayroth

“budget deficits should be avoided, even if the economy is below potential, because they reduce saving and lead to lower growth.” does this policy directive follow from the short-run or the long-run framework? neither. deficits are offset by an increase in private saving and do not lead to lower growth in the long-run or the short-run framework. both. deficits reduce saving and lead to lower growth in the long-run and the short-run framework. long-run framework. the long-run framework directs one to avoid deficits; in the short-run framework deficits are useful if the economy is significantly below potential. short-run framework. the short-run framework directs one to avoid deficits; in the long-run framework deficits are useful if the economy is significantly below potential.

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“budget deficits should be avoided, even if the economy is below potential, because they reduce savi...