Business, 04.08.2020 22:01, kkpowell

Say the marginal tax rate is 30 percent and that government expenditures do not change with output. Say also that the economy is at potential output and that the deficit is $200 billion. Required:a. What is the size of the cyclical deficit?b. What is the size of the structural deficit?c. How would your answers to a and b change if the deficit was still $200 billion but output was $200 billion below potential?d. How would your answers to a and b change if the deficit was still $200 billion but output was $100 billion above potential?

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Say the marginal tax rate is 30 percent and that government expenditures do not change with output....