Suppose Potential Income Is $60 Billion, Actual Income Is $40

question 100

Multiple Choice

Suppose potential income is $60 billion, actual income is $40 billion, and expenditures don't vary with income. If the actual budget deficit is $4 billion and the marginal tax rate is 20 percent, the cyclical deficit:

• A)is zero.
• B)is between zero and $4 billion.
• C)is $4 billion.
• D)cannot be determined from the given information.

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