The Government's Structural Budget Deficit Is the Budget Deficit That

question 75

Multiple Choice

The government's structural budget deficit is the budget deficit that would exist

• A)if real GDP were equal to potential GDP.
• B)with taxes and expenditures measured at the equilibrium level of GDP.
• C)if policy were changed to eliminate the business cycle.
• D)if tax rates were set to maximize tax revenues.
• E)if there were no discretionary fiscal interventions in the economy.

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Definitions:

Recession

A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, typically visible in real GDP, income, employment, manufacturing, and retail sales.

Excess Reserves

The amount of reserves that a bank holds beyond the minimum required by regulation or central bank policy.

Decrease Deposits

A reduction in the amount of funds deposited in banks or financial institutions, often indicating a shift in savings or investment strategies.

Excess Reserves

The reserves that banks hold over and above the legal requirement set by the central bank, available to lend or invest.