For the convenience of analyzing the part of the deficit that is sensitive to fiscal policy,the actual deficit is divided into which of the following components?
A)Automatic stabilizers and autonomous consumption.
B)C,I,G,X,and M.
C)Structural and cyclical deficits.
D)Frictional and seasonal deficits.

Question

Quizplus · Accepted Answer

The actual deficit is divided into structural and cyclical deficits to analyze the part of the deficit that is sensitive to fiscal policy. Structural deficits are the deficits that remain even after the economy has fully recovered from a recession, whereas cyclical deficits are caused by fluctuations in economic activity. By separating these two components, policymakers can better identify the appropriate fiscal policy response to address the deficit.

For the Convenience of Analyzing the Part of the Deficit