If the economy is in a recession, the structural deficit should equal the cyclical deficit.

Question

Quizplus · Accepted Answer

The structural deficit reflects long-term imbalances between revenues and expenditures, while the cyclical deficit is a result of short-term economic fluctuations. In a recession, there may be an increase in the cyclical deficit due to lower tax revenues and increased spending on unemployment benefits and other social programs, but the structural deficit will remain unchanged.

If the Economy Is in a Recession, the Structural Deficit