If the government thinks the natural unemployment rate is 5, when it is really 6, then the government will
A) overestimate the actual deficit.
B) underestimate the actual deficit.
C) overestimate the cyclically adjusted deficit.
D) underestimate the cyclically adjusted deficit.
E) none of the above
Question 2
Which of the following would increase the cyclically adjusted deficit?
A) an increase in income.
B) a decrease in income.
C) an increase in the primary deficit.
D) a decrease in the primary deficit.
E) none of the above
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