Refer to the above diagram. Assume that G and T1 are the relevant curves, the economy is currently at B, and the full-employment GDP is A. This economy has a(n):
A. cyclically adjusted budget deficit.
B. actual budget surplus.
C. cyclically adjusted budget surplus.
D. actual budget deficit.
Answer: B
Economics
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As the price level rises, the exchange rate
a. falls, so exports rise and imports fall. b. falls, so exports fall and imports rise. c. rises, so exports rise and imports fall. d. rises, so exports fall and imports rise.
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