Suppose the economy is at a full-employment GDP of $1 trillion and the tax revenue received by the federal government is always one-fifth of GDP.If planned government expenditure is $300 billion,the structural
A)Deficit is zero.
B)Deficit is $100 billion.
C)Surplus is $100 billion.
D)Deficit is $500 billion.

Question

Quizplus · Accepted Answer

The tax revenue is 1/5 of $1 trillion, which is $200 billion. With government expenditure at $300 billion, the structural deficit is $300 billion - $200 billion = $100 billion.

Suppose the Economy Is at a Full-Employment GDP of $1