For the convenience of analyzing the part of the deficit that is sensitive to fiscal policy,the actual deficit is divided into which of the following components?
A)Automatic stabilizers and autonomous consumption.
B)C,I,G,X,and M.
C)Structural and cyclical deficits.
D)Frictional and seasonal deficits.

Question

Quizplus · Accepted Answer

The actual deficit is commonly divided into structural and cyclical deficits in order to analyze the impact of fiscal policy. The structural deficit represents the portion of the deficit that would exist even under normal economic conditions, while the cyclical deficit represents the portion of the deficit that is sensitive to changes in economic conditions. This division allows policymakers to focus on addressing the cyclical deficit through fiscal policy measures such as changes in government spending or taxation. The other answer choices (A, B, and D) do not provide components that specifically focus on the impact of fiscal policy.

For the Convenience of Analyzing the Part of the Deficit