Use the Figure Below to Answer the Following Questions

question 76

Multiple Choice

Use the figure below to answer the following questions.

Figure 29.3.1
-Refer to Figure 29.3.1, which shows the outlays and revenues for the government of Pianoland. If potential GDP is $750 billion,

• A)neither a structural surplus nor a structural deficit exists.
• B)the structural deficit is $60 billion.
• C)the structural deficit is $40 billion.
• D)the structural surplus is $60 billion.
• E)the structural surplus is $40 billion.

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Definitions:

Cross Elasticity

A measure of how the quantity demanded of one good responds to a change in the price of another good.

Perfectly Inelastic

A situation in demand or supply in which the quantity demanded or supplied does not change regardless of changes in price.

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a specific price.

Income Elasticity

A measure of how much the demand for a product or service changes relative to a change in consumers' income.