How sensitive is the structural deficit to the state of the economy?
A)It is insensitive to the state of the economy.
B)The structural deficit changes cyclically with the economy.
C)Changes in the structural deficit trigger opposite swings in the economy.
D)The structural deficit changes countercyclically with the economy.

Question

Quizplus · Accepted Answer

The structural deficit is designed to reflect the underlying fiscal position of a government, removing the effects of the economic cycle. Therefore, it is insensitive to the state of the economy, as it aims to show the deficit that would exist even if the economy were at its potential level of output.

How Sensitive Is the Structural Deficit to the State of the Economy