The accompanying diagram shows two budget deficit functions for a hypothetical economy. Suppose the economy is at point A, the budget deficit function is Bo, and the level of potential output is $500 million. The structural budget deficit would be A. $2 million. B. $7 million. C. - $5 million. ○ D. $0. C № 006 8- A Budget Surplus/Deficit (millions of dollars) طر + မှာ B 125 250 375 0 ☑ 500 625 750 875 -3- B₁ Real GDP (millions of dollars) B Во Consider the following data about government debt and deficit in a given year: ― real interest rate on government bonds = 2% - growth rate of real GDP = 2% - current debt-to-GDP ratio = 28% - primary budget deficit as a percentage of GDP = 6% Over this one-year period the debt-to-GDP ratio will have A. fallen by 6 percentage points. B. risen by 0.6 percentage points. C. remained unchanged. D. risen by 6 percentage points. E. fallen by 0.6 percentage points.
The accompanying diagram shows two budget deficit functions for a hypothetical economy. Suppose the economy is at point A, the budget deficit function is Bo, and the level of potential output is $500 million. The structural budget deficit would be A. $2 million. B. $7 million. C. - $5 million. ○ D. $0. C № 006 8- A Budget Surplus/Deficit (millions of dollars) طر + မှာ B 125 250 375 0 ☑ 500 625 750 875 -3- B₁ Real GDP (millions of dollars) B Во Consider the following data about government debt and deficit in a given year: ― real interest rate on government bonds = 2% - growth rate of real GDP = 2% - current debt-to-GDP ratio = 28% - primary budget deficit as a percentage of GDP = 6% Over this one-year period the debt-to-GDP ratio will have A. fallen by 6 percentage points. B. risen by 0.6 percentage points. C. remained unchanged. D. risen by 6 percentage points. E. fallen by 0.6 percentage points.
Chapter12: Federal Budgets And Public Policy
Section: Chapter Questions
Problem 4.9P
Related questions
Question
![The accompanying diagram shows two budget deficit functions for a hypothetical
economy.
Suppose the economy is at point A, the budget deficit function is Bo, and the level
of potential output is $500 million. The structural budget deficit would be
A. $2 million.
B. $7 million.
C. - $5 million.
○ D. $0.
C
№ 006
8-
A
Budget Surplus/Deficit (millions of dollars)
طر
+
မှာ
B
125 250
375
0
☑
500 625 750 875
-3-
B₁
Real GDP (millions of dollars)
B
Во](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3d74d77e-4566-414e-a9d6-16b2c3362607%2F45815512-76b4-4559-95e4-9af21eba5a2b%2Fr2ca15h_processed.png&w=3840&q=75)
Transcribed Image Text:The accompanying diagram shows two budget deficit functions for a hypothetical
economy.
Suppose the economy is at point A, the budget deficit function is Bo, and the level
of potential output is $500 million. The structural budget deficit would be
A. $2 million.
B. $7 million.
C. - $5 million.
○ D. $0.
C
№ 006
8-
A
Budget Surplus/Deficit (millions of dollars)
طر
+
မှာ
B
125 250
375
0
☑
500 625 750 875
-3-
B₁
Real GDP (millions of dollars)
B
Во
![Consider the following data about government debt and deficit in a given year:
― real interest rate on government bonds = 2%
- growth rate of real GDP = 2%
- current debt-to-GDP ratio = 28%
- primary budget deficit as a percentage of GDP = 6%
Over this one-year period the debt-to-GDP ratio will have
A. fallen by 6 percentage points.
B. risen by 0.6 percentage points.
C. remained unchanged.
D. risen by 6 percentage points.
E. fallen by 0.6 percentage points.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3d74d77e-4566-414e-a9d6-16b2c3362607%2F45815512-76b4-4559-95e4-9af21eba5a2b%2Fk1xromt_processed.png&w=3840&q=75)
Transcribed Image Text:Consider the following data about government debt and deficit in a given year:
― real interest rate on government bonds = 2%
- growth rate of real GDP = 2%
- current debt-to-GDP ratio = 28%
- primary budget deficit as a percentage of GDP = 6%
Over this one-year period the debt-to-GDP ratio will have
A. fallen by 6 percentage points.
B. risen by 0.6 percentage points.
C. remained unchanged.
D. risen by 6 percentage points.
E. fallen by 0.6 percentage points.
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