Question

Rather than simply comparing government revenues and tax receipts, analysts are sometimes interested in the cyclically adjusted budget. What does it mean to consider the cyclical deficit or surplus

Answer 1

To consider cyclical deficit means to consider iterations of the economy especially as it relates to expansion and contraction of the economy.

When the government spends more than it makes, a deficit is said to have occurred. When the economy is expanding and growing, tax receipts go up and government spending goes down decreasing the cyclical deficit. The reverse is the case for surplus.

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