Macroeconomics 11th Edition by Michael Parkin

Exercise 38

Fiscal Stimulus
The economy is growing slowly, the inflationary gap is large, and there is a budget deficit.
a. Do we know whether the budget deficit is structural or cyclicalExplain your answer.
b. Do we know whether automatic stabilizers are increasing or decreasing aggregate demandExplain your answer.
c. If a discretionary decrease in government expenditure occurs, what happens to the structural budget balanceExplain your answer.