A structural deficit occurs when the government budget has a deficit
A) even though real GDP is less than potential GDP.
B) even though real GDP is greater than structural GDP.
C) even though real GDP is equal to potential GDP.
D) that is nominal, as opposed to a real budget deficit.

Question

Quizplus · Accepted Answer

A structural deficit occurs when a government's budget is in deficit even when the economy is operating at its full capacity, meaning when real GDP is equal to potential GDP. This indicates that the deficit is not due to economic cycles but is inherent in the government's budget structure.

A Structural Deficit Occurs When the Government Budget Has a Deficit