1. Assume that a country X has a law that requires its government to always maintain a balanced budget. Does this law

[answerhappygod]

1. Assume that a country X has a law that requires its
government to always maintain a balanced budget. Does this law
imply that X can no longer use a temporary increase in government
spending to increase aggregate output in the short-run?
Notes:
i) Y is real domestic output;
ii) E is the exchange rate in domestic currency/foreign currency
terms,
iii) if a government maintains a balanced budget, this implies
that total government expenditure 𝐺 is financed from government
taxes 𝑇. 𝐺 > 𝑇 implies there is a government budget deficit.