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Suppose potential GDP is $20 trillion. If the economy produces at potential, then the government budget deficit is $1 trillion. If actual GDP is $19
Suppose potential GDP is $20 trillion. If the economy produces at potential, then the government budget deficit is $1 trillion. If actual GDP is $19 trillion, the government deficit is $1.25 trillion. The increase in deficit that results from GDP below potential is the result of O a stimulus plan O automatic stabilizers O a decrease in tax rates O the absence of an ex ante balance budget requirement (BBR)
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