Based on the conventional view of fiscal policy and potential GDP in the long run, explain what happens to each of the following if the government runs a budget deficit:
a. the supply of loanable funds to the private sector
b. long-term real interest rates
c. the capital stock
d. the investment rate
e. potential GDP
If the government runs a budget deficit:
a. decreases
b. increase
c. decreases
d. decreases
e. decreases
Economics
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Economics