Refer to the Above Diagram Where T Is Tax Revenues

question 38

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:

• A)actual budget deficit exceeds the full-employment deficit.
• B)actual budget deficit is less than the full-employment deficit.
• C)full-employment deficit exceeds the cyclical deficit.
• D)cyclical deficit exceeds the full-employment deficit.