In the late 199 0 s, the U.S. government was slightly ahead of the Canadian government in reducing its budget deficit. The following table shows the actual budget deficit and the structural budget deficit (both as a percentage of GDP) for the United States from 198 9 to 199 7.

a. On a scale diagram (with the year on the horizontal axis), graph the actual deficit and the structural deficit.

b. From 199 0 to 199 4 , the actual budget deficit is above the structural deficit. Explain why.

c. From 199 5 to 199 7 , the actual budget deficit is below the structural deficit. Explain why.

d. Identify the periods when U.S. fiscal policy was expansionary.

e. Identify the periods when U.S. fiscal policy was contractionary.

f. Look back at Figure 31 -5. How does the stance of U.S. fiscal policy over this period compare with Canada's?

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Year Actual Deficit Structural Deficit 1989 2.8 2.9 1990 3.9 3.2 1991 4.6 3.4 1992 4.7 3.7 1993 3.9 3.7 1994 3.0 2.8 1995 2.3 2.6 1996 1.4 1.6 1997 0.3 1.0