The structural deficit is that deficit that would exist
A) with the taxes and outlays that would occur if the economy was at the equilibrium level of real GDP.
B) with the taxes and outlays that would occur if the economy was at the full employment level of real GDP.
C) if tax rates were set to maximize tax revenues.
D) if there were no discretionary fiscal interventions into the economy.

Question

Quizplus · Accepted Answer

The structural deficit is the part of the budget deficit that would exist even if the economy were at its potential or full employment level of output. It reflects the underlying fiscal position of the government, independent of the business cycle.

The Structural Deficit Is That Deficit That Would Exist