Macroeconomics 13th Edition by William Baumol ,Alan Blinder

Exercise 15

(More difficult) In the economy considered in Test Yourself Question 3, suppose the government, seeing that it has not wiped out the deficit, keeps cutting G until it succeeds in balancing the budget. What level of GDP will then prevail
Reference Test Yourself Question 3,
You are given the following information about an economy:

a. Find equilibrium GDP and the budget deficit.
b. Suppose the government, unhappy with the budget deficit, decides to cut government spending by precisely the amount of the deficit you just found. What actually happens to GDP and the budget deficit, and why