Question: please help with explain 1. Say the marginal tax rate is 30% and that government expenditures do not change with output. Say also that the
please help with explain

1. Say the marginal tax rate is 30% 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. 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 were still $200 billion but output were $100 billion below potential? d. How would your answers to a and b change if the deficit were still $200 billion but output were $100 billion above potential? e. Which is likely of more concern to policy makers: a cyclical or a structural deficit? 2. What fiscal policy actions would you recommend in the following instances? a. The economy begins at potential output, but foreign economies slow dramatically. b. The economy has been operating above potential output and inflationary pressure rises. C. A new technology is invented that significantly raises potential output
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