Question 24 4.12 pts Suppose that we have the following information concerning the government's finances and the macroeconomy for a given year: Government Debt: $12 trillion Inflation: 10% Nominal Deficit: $1.5 trillion What is the real deficit for the year? O $300 billion O $250 billion O $1.2 trillion $1.5 trillion D Question 25 4.12 pts Suppose we have the following scenario: Multiplier: 1.7 Tax Rate: 20% Increase in spending: $300 Billion Total Deficit in the previous year: $1 Trillion Based on the information provided what is the deficit that arises from the increase in spending from the government? $S10 billion O $198 billion $300 billion e $188 billion Question 26 4.12 pts Suppose we have the following information concerning the federal government's finances: Multiplier: 1.7 Tax Rate: 20% Increase in spending: $300 Billion Total Deficit in the previous year. $1 Trillion Why is the current deficit brought on by the increase in government spending less than the increase in spending by the government? The fiscal stimulus increased the overall income in the economy causing tax revenues to increase The fiscal stimulus increased the overall income in the economy causing tax revenues to decrease The fiscal stimulus decreased the overall income in the economy causing tax revenues to increase The Ricardian Equivalence theorem caused individuals to increase their spending which generated increased tax revenue for the government. D Question 27 4.12 pts Suppose we have the following information for 2008: Potential output: $16 trillion Actual output: $14 trillion Actual Deficit $ 500 billion Tax Rate: 20% What is the cyclical deficit in 2008? $400 billion $2 trillion $500 billion $100 billion inction 29