How Will an Increase in Federal Government Spending Without an Increase

question 160

Essay

How will an increase in federal government spending without an increase in taxes affect real GDP and the price level in the short run in a closed economy and in an open economy?

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Definitions:

Profitability

Profitability is a measure of the efficiency and financial success of a business or project, indicated by the ability to generate income greater than its expenses and costs.

Times Interest Earned

Times interest earned is a financial ratio that measures a company's ability to meet its debt obligations by comparing its income before interest and taxes to its interest expenses.

Interest Expense

The cost of borrowing money.

Income Tax Expense

The cost associated with income taxes owed to federal, state, or local governments, recognized in the accounting period in which the income was earned.