Question: The table below provides data for a hypothetical country.All values are in billions of dollars. Real GDP Government Expenditures (G) Net Taxes (T) 500 300

The table below provides data for a hypothetical country.All values are in billions of dollars.

Real GDP Government Expenditures (G) Net Taxes (T)

500 300 130

600 300 160

700 300 190

800 300 220

900 300 250

(a)Assume potential GDP is $700 billion.If this country is producing $600 billion of real GDP, how large is its budget deficit? Its structural deficit? It's cyclical deficit?Is the country's fiscal policy expansionary or is contractionary?Explain.

(b)If next year the cyclical deficit decreased, what does that tell you about the country's economic growth?

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