Unformatted text preview: economy coming out of the recession, then the deficit may decrease or the surplus may increase. If not, the deficit will increase or the surplus will decrease. On the other hand, if government spending were increased at a time when the economy has low unemployment and is operating at or near production capacity; economy has low unemployment and is operating at or near production capacity; stimulating the economy further may result in inflation as managers opt to increase prices to stabilize inventories. Under this scenario, additional government spending will probably not be offset by increased tax revenues, and the deficit will probably increase or the surplus will decrease. 49...
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This note was uploaded on 12/29/2011 for the course ECO 210 taught by Professor Malls during the Fall '10 term at SUNY Stony Brook.
- Fall '10