If the budget deficit is $50 billion and the structural deficit is $10 billion, the cyclical deficit is
A) $50 billion
B) $10 billion.
C) $60 billion.
D) $40 billion.

Question

Quizplus · Accepted Answer

The cyclical deficit is the portion of the deficit that is caused by economic conditions and would disappear under full employment. Therefore, it is calculated by subtracting the structural deficit from the total deficit. In this case, $50 billion (total deficit) - $10 billion (structural deficit) = $40 billion (cyclical deficit).

If the Budget Deficit Is $50 Billion and the Structural