A structural deficit exists even if real GDP equals potential, as it represents a long-term shortfall between government spending and revenue. It is not directly related to the level of real GDP or the state of the business cycle, unlike a cyclical deficit.

Solved

A Structural Deficit

Question 77

Multiple Choice

A structural deficit

A) is present only if real GDP is greater than potential.
B) exists even if real GDP equals potential.
C) equals the cyclical deficit plus the actual deficit.
D) is greater than a cyclical deficit.
E) occurs when the economy is in a recession.

Correct Answer: