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prohojiy [21]
4 years ago
7

The cyclical deficit:________ A. is not affected by changes in actual income or potential income. B. rises as the economy expand

s and falls as the economy contracts. C. is the deficit that exists if the economy is at potential income. D. rises as the economy moves below potential output.
Business
1 answer:
IceJOKER [234]4 years ago
8 0

Answer:

B. rises as economy expands, falls as economy contracts.

Explanation:

Deficit is the excess of government expenditures over government revenues.

Cyclical Deficit is interconnected to the Business Cycle phases of : Expansion, Peak, Recession, Depression, Trough, Recovery.

During growth stages of Business Cycle: Expansion or Recovery - this deficit falls because; there is more economic/ business activity & so more taxes receipts for govt & less govt expenditure on social support transfer payments (eg subsidies) to support public.

During declining stages: Recession or Depression - this deficit rises because; there is less economic/ business activity & so less taxes receipts for govt & more govt expenditure on social support transfer payments (eg subsidies) to support public.

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