Final answer:
The deficit response index (DRI) measures the sensitivity of the budget deficit to changes in GDP. It represents how much the deficit will change as a proportion of GDP.
Step-by-step explanation:
The deficit response index (DRI) is not the amount that the deficit changes for every dollar change in GDP. The DRI measures the sensitivity of the budget deficit to changes in GDP. It represents how much the deficit will change as a proportion of GDP. It can be calculated by dividing the change in the deficit by the change in GDP.
For example, if the DRI is 0.5, it means that for every 1% change in GDP, the deficit will change by 0.5%. If GDP increases by 2%, the deficit will increase by 1%. If GDP decreases by 1%, the deficit will decrease by 0.5%.