The diagram below shows two budget deficit functions for a hypothetical economy.
FIGURE 31-2 Refer to Figure 31-2.Initially,suppose the economy is at point A on budget deficit function
.Real GDP (Y) is $100 million.If the level of potential output (Y*) were $300 million,the structural budget deficit would be
A) $2 million.
B) $14 million.
C) measured by the vertical distance between the horizontal axis and
(at real GDP = 300) .
D) measured by the vertical distance between point A and the budget deficit that would exist at real GDP = 300 million.
E) Insufficient information to know.
Correct Answer:
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