A structural deficit is a government budget deficit when the economy is at potential GDP.

Question

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A structural deficit occurs when government spending exceeds revenues even when the economy is operating at its full potential. This means that there are fundamental imbalances in the government's budget that cannot be corrected simply through economic growth or recovering from a recession. In contrast, a cyclical deficit occurs when government spending exceeds revenues due to a temporary economic downturn or recession.

A Structural Deficit Is a Government Budget Deficit When the Economy