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In the long-run framework, budget surpluses: A. should be run on a permanent basis since they boost saving and investment and stimulate economic growth. B. should be run whenever output dips below potential output. C. should never be run since they crowd out investment in the short run. D. are better than budget deficits over the long run because unlike budget deficits, they increase saving and investment.
On the next page is a graph of a labor market in equilibrium, with market clearing values of wages and hours of employment being W 1 and E 1 respectively. a. The Federal gov
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