The structural deficit represents
A)Federal revenues minus federal expenditures at full employment under prevailing fiscal policy.
B)Federal revenues minus expenditures under current fiscal policy at current output.
C)A measure of the size of recessionary or inflationary gaps.
D)The difference between expenditures at full employment and expenditures at cyclical unemployment.

Question

Quizplus · Accepted Answer

The structural deficit is the portion of the government's budget deficit that exists even when the economy is at its potential level of output, or full employment. It reflects the underlying fiscal policy stance of the government, independent of the business cycle's effects on revenues and expenditures. Choices B, C, and D describe other concepts related to fiscal policy and economic conditions but do not accurately define the structural deficit.

The Structural Deficit Represents