Assume That the Total Deficit Is $100 Billion and the Economy

question 40

Multiple Choice

Assume that the total deficit is $100 billion and the economy is above potential output.Now the level of economic activity falls back to its potential level output,leading to an decrease in tax revenues increase by $50 billion an increase in transfer payments fell by $10 billion.Then,what is the structural deficit?

• A)$100 billion
• B)$110 billion
• C)$150 billion
• D)$160 billion
• E)can't tell based on information given.

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Definitions:

ROE

Return on Equity (ROE) is a measure of a corporation's profitability that reveals how much profit a company generates with the money shareholders have invested.

Total Assets Turnover

A financial ratio that measures the efficiency of a company's use of its assets to generate sales revenue.

Equity Multiplier

A measure of a company's financial leverage, calculated by dividing its total assets by total stockholders' equity.

Net Income

The net income of a company once all costs and taxes are subtracted from the total earnings.