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:

Self-motivation

The ability to drive oneself to take initiative and action towards achieving goals without external encouragement.

80/20 Rule

A principle, also known as the Pareto Principle, suggesting that 80% of effects come from 20% of causes in many situations.

Schoolwork

Assignments, projects, or studies undertaken by students as part of their educational curriculum.

Commitments

Obligations or engagements that an individual has promised to fulfill or undertake.