Refer to the Above Diagram Where T Is Tax Revenues

question 60

Multiple Choice

Refer to the above diagram where T is tax revenues and G is government expenditures.All figures are in billions of dollars.If the full-employment GDP is $400 billion while the actual GDP is $200 billion, the cyclical deficit is:

• A)$40 billion.
• B)$20 billion.
• C)zero.
• D)$60 billion.

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Definitions:

Units Produced

The total number of units created by a production process over a specific period of time.

Break Even

The point at which total revenues equal total costs, resulting in neither profit nor loss.

Common Fixed Expenses

Common fixed expenses are costs that remain constant for a given period regardless of the level of production or sales, and are shared among multiple product lines or departments within a company.

CM Ratio

The contribution margin ratio, representing the portion of sales that contributes to covering fixed costs after variable costs have been paid.