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A) based on the national saving and investment identity, what are the three ways the macroeconomy might react to greater government budget deficits?

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Based on the national saving and investment identity, the three ways the macro economy might respond to greater government budget deficits are reduced investments, a wider trade deficit and increased savings. In addition, larger budget deficits upsurge the demand for capital which pushes up interest rates and make private sector investment more costly.
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