Suppose the Economy Is in a Recessionary Gap

Multiple Choice

Suppose the economy is in a recessionary gap.If government expenditures are currently $3.5 trillion and tax revenues are currently $2.9 trillion,the (total) budget deficit is _____________.Assume that economists estimate that if the economy were operating at full employment,government expenditures would be $3.2 trillion and tax revenues would be $3.1 trillion.The structural deficit must be_________________ and the cyclical deficit must be _______________.

A) $3.5 trillion; $2.9 trillion; $600 billion
B) $600 billion; $300 billion; $300 billion
C) $600 billion; $100 billion; $500 billion
D) $600 billion; $500 billion; $100 billion
E) $500 billion; $100 billion; $400 billion