Which of the following relationships is CORRECT?
A) actual budget deficit = structural deficit - cyclical deficit
B) cyclical surplus = actual budget deficit - cyclical deficit
C) actual budget deficit = structural deficit + cyclical deficit
D) cyclical deficit = actual budget deficit + structural deficit

Question

Quizplus · Accepted Answer

The actual budget deficit is the sum of the structural deficit (which is the deficit that remains at a natural level of unemployment when the economy is operating at its potential) and the cyclical deficit (which is the deficit that occurs because of the business cycle, during downturns in economic activity).

Which of the Following Relationships Is CORRECT