Question

Potential GDP is​ $12 trillion and if real GDP equaled potential​ GDP, the budget deficit would be​ $1 trillion. Real GDP actually equals​ $14 trillion and the budget surplus is​ $3 trillion. The economy has a structural​ ______ and a cyclical​ ______. A. surplus of​ $3 trillion; surplus of​ $2 trillion B. deficit of​ $1 trillion; surplus of​ $2 trillion C. deficit of​ $1 trillion; surplus of​ $4 trillion D. surplus of​ $4 trillion; deficit of​ $1 trillion

Answer 1

C. Deficit of​ $1 trillion; Surplus of​ $4 trillion.

Step-by-step explanation:

Structural Deficit = $1 trillion

Cyclical Surplus = $4 trillion