The cyclical deficit
A)is a persistent economic phenomenon.
B)occurs when the economy is at full employment.
C)arises purely because real GDP does not equal potential GDP.
D)is an accumulation of the government debt.
E)exceeds the structural surplus.

Question

Quizplus · Accepted Answer

The cyclical deficit occurs when the actual level of real GDP differs from the potential GDP. It is an indicator of the gap between the actual and potential output levels and is a temporary phenomenon that occurs during economic fluctuations.

The Cyclical Deficit