Multiple Choice
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 B0.Real GDP (Y) is $100 million.If the level of potential output (Y*) were $300 million,the cyclical component of the actual budget deficit would be
A) $4 million.
B) $6.5 million.
C) $7.5 million.
D) $14 million.
E) Insufficient information to know.
Correct Answer:

Verified
Correct Answer:
Verified
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