-The figure above shows tax revenues and government expenditures in the economy of Meadowlake. Potential GDP is $19 trillion. If real GDP is $17 trillion, then the government has a

Question

Quizplus · Accepted Answer

A cyclical deficit occurs when an economy is operating below its potential GDP, leading to lower tax revenues and possibly higher government expenditures, which in this case is evident as real GDP ($17 trillion) is below potential GDP ($19 trillion).

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