When real GDP equals potential GDP of $12 trillion, the budget deficit is $1 trillion. Real GDP actually equals $14 trillion and the budget surplus is $3 trillion. The economy has a structural ________ and a cyclical ________.
A) deficit of $1 trillion; surplus of $4 trillion
B) deficit of $1 trillion; surplus of $2 trillion
C) surplus of $4 trillion; deficit of $1 trillion
D) surplus of $3 trillion; surplus of $2 trillion
E) deficit of $4 trillion; surplus of $1 trillion
Correct Answer:
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