The structural deficit can be defined as
A)the deficit that is structurally obstructing economic recovery to reach level of high employment.
B)a hypothetical construct that estimates the deficit, given current tax rates and expenditure policies, if the economy were operating at some fixed high-employment level.
C)the deficit necessary to restructure the economy and reach a desired high-employment level.
D)the deficit that would prevail if fiscal policy were structured differently in order to reach a desired high-employment level.

Question

Quizplus · Accepted Answer

The structural deficit is a hypothetical estimate of the deficit that would exist if the economy were operating at a fixed high-employment level, given current tax rates and expenditure policies. It is used to analyze how various policy changes might affect the deficit over time. A is incorrect because the structural deficit does not necessarily obstruct economic recovery. C and D are incorrect because the structural deficit is not necessarily a deficit that is necessary or desired for restructuring the economy or achieving high employment levels.

The Structural Deficit Can Be Defined as