The structural budget surplus is the size of the budget surplus when
A)there is a spending balance.
B)the AD curve intersects the IA line.
C)the unemployment rate is zero.
D)the economy is in an expansion.
E)real and potential GDP are equal.

Question

Quizplus · Accepted Answer

The structural budget surplus refers to the budget surplus that exists when the economy is operating at its potential level of output, meaning when real GDP equals potential GDP. This condition abstracts from cyclical factors that can cause temporary surpluses or deficits.

The Structural Budget Surplus Is the Size of the Budget