Refer to the accompanying table for Waxwania:
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a. Waxwania is producing $550 of real GDP, whereas the potential real GDP (or full-employment real GDP) is $650. How large is its budget deficit?
$.
How large is its cyclically adjusted budget deficit?
$.
b. How large is its cyclically adjusted budget deficit as a percentage of potential real GDP?
Instructions:Round your answer to 2 decimal places.
Deficit =percent.
c. Is Waxwania’s fiscal policy expansionary or is it contractionary?
(Click to select)ContractionaryExpansionary
.
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