If the economy's full-employment output is $12 trillion, actual output is $10 trillion, and the budget deficit is $2 trillion, the deficit in this case is known as a

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Quizplus · Accepted Answer

A cyclical deficit occurs when an economy's output is below its potential, leading to lower tax revenues and higher government spending, which in this case is due to the economy not being at full employment.

If the Economy's Full-Employment Output Is $12 Trillion, Actual Output