The table below shows the relationship between the deficit and real GDP. Draw a diagram depicting this relationship. Assume potential GDP is $6,900 billion.
(A)What is the structural deficit?
(B)If real GDP is $7,050 billion, what is the cyclical deficit?
(C)If real GDP is $6,750 billion, what is the cyclical deficit?
(D)Show what will happen to the relationship between the deficit and real GDP if Medicare and federal prison incarceration costs increase without any corresponding increase in taxes or reduction in other programs.
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Q112: Exhibit 26-1 Q125: Suppose as a professional economist you are Q126: Suppose that real GDP has been above Q126: Suppose you have the following data on Q127: Suppose the economy is in a boom Q132: If real GDP is equal to potential Q133: Why is there an inverse relationship between Q133: Suppose the budget deficit for a hypothetical Q135: Suppose that the economy is in a Q136: Real GDP and the budget deficit are![]()
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