Expansionary fiscal policy used during economic downturns inevitably leads to a budget β. suppose the government responds to the downturn by increasing government spending by $250 billion, but keeps tax rates the same. in this scenario, the β will rise by β $250 billion. in a recession, β falls and β rises, which means tax revenues will β even if tax rates do not change.
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Expansionary fiscal policy used during economic downturns inevitably leads to a budget β. suppose th...
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