What is the difference between the actual deficit, the cyclically adjusted deficit, and the cyclical deficit?

What will be an ideal response?

The actual budget deficit for any year consists of the cyclically adjusted and the cyclical deficit. The cyclically adjusted deficit is the difference between government expenditures and tax collections which would occur if there were full employment output. The cyclical deficit is the portion of the actual deficit that arises because the economy is in recession and is produced by this downturn in the business cycle. During a recession, a cyclical deficit often occurs because tax revenues fall as incomes fall and government expenditures increase as more is spent for government transfer payments and other programs. The cyclical deficit occurs because of the operation of these automatic stabilizers.

Economics

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If the forward rate is greater than the spot rate, what are markets signaling about their expectations for the future spot rates for the home currency?

What will be an ideal response?

Economics

Which of the following statements regarding the use of gold as money is false?

A) The money supply would be easy to control because of the predictability of new gold discoveries. B) It is durable. C) It has value other than money. D) It is acceptable to traders.

Economics