Scenario 32-2 ​

question 116

Essay

Scenario 32-2
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Due to concerns about a rising level of debt relative to GDP, Congress and the President cut expenditures and raise taxes.
-Refer to Scenario 32-2. In the market for loanable funds which curve(s) does this policy change shift? Which direction does it shift?

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Definitions:

Labor Force

The total number of people who are of working age, capable of working, and actively seeking employment or currently employed.

Employed

The status of having paid work, being engaged in a job or business.

Unemployed

Individuals who are capable of working and actively seeking work but without employment during the period of assessment.

GDP Deflator

is an economic measure of inflation that indicates the level of prices of all new, domestically produced, final goods and services in an economy.