Suppose an Economy Is Operating Below Potential Real GDP and the Government

question 53

Multiple Choice

Suppose an economy is operating below Potential Real GDP and the government has a structural deficit equal to $100 billion.If the total government deficit is equal to $150 billion then the cyclical deficit is equal to:

• A)$150 billion.
• B)$250 billion.
• C)$50 billion.
• D)$100 billion.

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Definitions:

Maturation

The process of becoming mature, involving the growth and development of the body or mind, or the development of natural abilities at a predetermined pace and sequence.

Object Permanence

The awareness that things continue to exist even when not perceived.

Accommodation

In cognitive development, the process by which existing mental structures and behaviors are modified to adapt to new experiences.

Imprinting

The process by which certain animals form attachments during a critical period very early in life.