A structural budget deficit exists when a deficit:
Correct answer: A. Remains after temporary economic effects are removed
- A. Remains after temporary economic effects are removed
- B. Occurs only during a severe financial crisis
- C. Results entirely from short term cash management
- D. Is created by a sudden fall in export earnings
Explanation
A structural deficit reflects a lasting mismatch between government revenue and expenditure at normal economic activity. It is different from a cyclical deficit, which is linked to recession or boom conditions.
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About Public Finance
Government revenue and expenditure are analysed through taxation, public borrowing, budgets, subsidies, transfers and public debt. The topic explains how fiscal policy affects resource allocation, income distribution, economic stability and growth, while distinguishing direct from indirect taxes, progressive from regressive taxation, and public goods from goods supplied by private markets.
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