-The figure above shows tax revenues and government expenditures in the economy of Meadowlake. Potential GDP is $17 trillion. If real GDP is $15 trillion, then the government has a ________.

Question

Quizplus · Accepted Answer

A cyclical deficit occurs when an economy is operating below its potential GDP, as is the case here with real GDP at $15 trillion compared to a potential GDP of $17 trillion. This indicates that the deficit is due to the economic cycle rather than structural issues in the budget.

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