A cyclical surplus is a
A) budget surplus only because real GDP is equal to potential GDP.
B) nominal, as opposed to real, budget surplus.
C) budget surplus only because real GDP is greater than potential GDP.
D) budget surplus only because real GDP is less than potential GDP.

Question

Quizplus · Accepted Answer

A cyclical surplus occurs when actual output (real GDP) is above potential output (potential GDP), leading to an increase in tax revenue and therefore a budget surplus.

A Cyclical Surplus Is a