The Diagram Below Shows Two Budget Deficit Functions for a Hypothetical

question 49

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 $400 million,the structural budget deficit would be

• A)$14 million.
• B)$4 million.
• C)negative.
• D)-$10 million.
• E)$0.

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Definitions:

Inventory Purchases

The acquisition of goods and materials a company intends to sell in its ordinary course of business.

Beginning Inventory

The value of goods available for sale at the start of an accounting period.

Beginning Inventory

The value of all inventory held by a company at the start of an accounting period.

Gross Profit

Gross Profit is the financial metric calculated by subtracting the cost of goods sold (COGS) from total sales revenue.