In Year 1 Suppose the Economy Is at Potential GDP

question 5

Essay

In Year 1 suppose the economy is at potential GDP and that the federal budget deficit equals $100 billion.In Year 2 the federal budget deficit rises to $150 billion,but the cyclically adjusted budget deficit falls to $75 billion.How can the actual budget deficit rise and the cyclically adjusted budget deficit fall?

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Definitions:

Thyrotropin

A hormone, also known as thyroid-stimulating hormone (TSH), produced by the pituitary gland to regulate the production of hormones by the thyroid gland.

Glucocorticoids

A class of steroid hormones that play a role in regulating glucose metabolism, anti-inflammatory actions, and immune responses.

Metabolism

The successive transformations to which a substance is subjected from the time it enters the body to the time it or its decomposition products are excreted, and by which nutrition is accomplished and energy and living substance are provided.

Protein

A nutrient found in foods such as eggs, meat, fish, legumes, and soy products that provides energy to the body.