A Structural Deficit

question 10

Multiple Choice

A structural deficit

• A)is present only if real GDP is greater than potential.
• B)exists even if real GDP equals potential.
• C)equals the cyclical deficit plus the actual deficit.
• D)is greater than a cyclical deficit.
• E)occurs when the economy is in a recession.

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Definitions:

External Costs

Expenses that a business or economic activity imposes on unrelated third parties or the environment, which are not reflected in market prices.

External Benefits

External Benefits are positive effects of a production or consumption activity on third parties who did not directly participate in the economic transaction.

Living in Poverty

The condition of having insufficient resources or income to meet basic life needs.

Invisible Hand

A metaphor introduced by Adam Smith to describe the self-regulating nature of the marketplace, where individual self-interests unintentionally benefit society as a whole.