-The figure above shows tax revenues and government expenditures in the economy of Meadowlake. Potential GDP is $16 trillion. If real GDP is $16 trillion, then the government has a ________.

Question

Quizplus · Accepted Answer

When real GDP equals potential GDP, any difference between tax revenues and government expenditures reflects the structural balance of the budget, not a cyclical component. If tax revenues equal government expenditures at the potential GDP, it indicates a balanced budget, not a surplus or deficit of a cyclical or structural nature.

-The Figure Above Shows Tax Revenues and Government Expenditures in the Economy