a. The following data describe government spending and revenue.

Tax revenues = 2000 + 0.1 GDP

Transfers = 1500 - 0.05 GDP

Government purchases = 3000

Government investment = 200

Interest payments = 200

Full employment GDP = 15,000

Actual GDP = 16,000

i. How much is the budget deficit?

ii. How much is the primary budget deficit?

iii. How much is the full-employment budget deficit?

iv. How much is the current deficit?

v. How much is the current primary deficit?

b. Explain what is meant by the "wage-price" spiral.