In the figure above, if there is no Ricardo-Barro effect, the ...

[Haya94]

In the figure above, if there is no Ricardo-Barro effect, the government has a budget ________ because the ________.
 
  A) surplus of 0.2 trillion; SLF curve lies to the right of the PSLF curve.
  B) deficit of 0.2 trillion; SLF curve lies to the right of the PSLF curve.
  C) deficit of 0.4 trillion; SLF curve shows a smaller quantity of LF than the PSLF curve.
  D) surplus of 0.4 trillion; SLF curve shows a larger quantity of LF than the PSLF curve.
  E) surplus of -0.2 trillion; SLF curve lies to the right of the PSLF curve.

Question 2

If the economy is at full employment, then the inflation rate
 
  A) is less than the expected inflation rate.
  B) is equal to zero.
  C) can be anywhere on a short-run Phillips curve.
  D) is equal to the expected inflation rate.
  E) exceeds the expected inflation rate.

[paavo]

Answer to Question 1

A

Answer to Question 2

D

[Haya94]

Excellent

[blakcmamba]

Gracias!