The Cyclical Deficit Is $400 Billion, Potential Output Is $9

question 123

Multiple Choice

The cyclical deficit is $400 billion, potential output is $9 trillion and the tax rate is 16 percent. With this information, we can infer that the actual output of this economy is:

• A)$6 trillion.
• B)$11.5 trillion.
• C)$6.5 trillion.
• D)$9 trillion.

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Definitions:

Depreciable Asset

A tangible or intangible asset used in operations that can be depreciated over its useful life due to wear and tear, deterioration, or obsolescence.

Equity Method

An accounting technique used by companies to assess the profits earned by their investments in other companies, recording income based upon the percentage of ownership.

Intra-entity Gross Profit

This refers to the gross profit earned by a company from sales made internally between its own divisions or subsidiary entities.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a business, including materials and labor costs.