If the economy is in a recession, the full-employment deficit is ________ the actual deficit.

Name: If the economy is in a recession, the full-employment deficit is ________ the actual deficit.
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Question

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The full-employment deficit is smaller than the actual deficit during a recession because the actual deficit includes the effects of lower tax revenues and higher spending on unemployment benefits and other automatic stabilizers that are not part of the full-employment budget.

If the Economy Is in a Recession, the Full-Employment Deficit