The actual budget may be in deficit while the full-employment budget is in surplus.

Question

Quizplus · Accepted Answer

The actual budget refers to the government's budget that is based on the current level of economic activity, while the full-employment budget is hypothetical and assumes an economy where all resources are fully utilized. Therefore, it is possible for the actual budget to have a deficit (when government spending exceeds revenue) while the full-employment budget has a surplus (when government revenue exceeds spending).

The Actual Budget May Be in Deficit While the Full-Employment