The actual budget balance may be a deficit while the structural budget balance is a surplus.

Question

Quizplus · Accepted Answer

The actual budget balance reflects the government's revenues and expenditures in a given year, including the effects of the economic cycle, while the structural budget balance adjusts for the economic cycle, isolating the impact of temporary economic conditions. Therefore, it's possible for the actual budget to be in deficit due to temporary economic downturns, while the structural balance shows a surplus, indicating a fundamentally sound fiscal position when the economy is at its potential level of output.

The Actual Budget Balance May Be a Deficit While the Structural