Suppose the government's actual budget deficit is equal to the structural budget deficit.Then it must be the case that

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Quizplus · Accepted Answer

The structural budget deficit represents the deficit that would exist even if the economy was operating at potential output (i.e. real GDP is equal to potential GDP). If the actual budget deficit is equal to this structural budget deficit, then it must mean that the economy is currently operating at potential output, which is represented by choice D. Choices A, B, and C do not necessarily follow from the given information, and choice E is not a valid conclusion based on the given information.

Suppose the Government's Actual Budget Deficit Is Equal to the Structural