The federal government recently ran a budget surplus, but has since returned to running a budget deficit.
Explain why reducing the budget deficit can cause short-term pain in the form of lower employment, higher unemployment, and a recession.
Explain why expansionary monetary policy would help decrease the likelihood of a recession if it were adopted at the same time the budget deficit was being reduced.
Present an analysis that identifies any long term gains which could result from a reduction in the budget deficit. (Analyze the composition of output.)
PLEASE HELP ME! It's my final study guide.