Solved: Describe the effects on cost of borrowing by issuing bonds, Macroeconomics

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Describe the effects on cost of borrowing by issuing bonds

Problem

A government committed to long-run fiscal discipline (i.e., low or zero budget deficits) usually conducts contractionary fiscal policy at some point to reduce the government deficit. If that action is interpreted as a commitment to long run fiscal discipline

a) Describe the effects on autonomous consumption and investment expenditure.

b) Describe the effects on the cost of borrowing by issuing bonds.

The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.

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Macroeconomics: Describe the effects on cost of borrowing by issuing bonds

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