Suppose an economist is analyzing the impact of a budget deficit used to finance a significant infrastructure project that will pay significant dividends in the coming years. That economist will focus on

Question

Quizplus · Accepted Answer

The economist should focus on both the ratio of the deficit to GDP, as this will give an indication of the burden on the economy, and whether the infrastructure project will produce enough gains in the future to justify the borrowing. Neglecting either of these factors could lead to incomplete or inaccurate analysis.

Suppose an Economist Is Analyzing the Impact of a Budget