A ___________ deficit is the amount of the deficit that would exist if the current g and t were applied given full employment.

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19-08-2022
Social Studies

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A ___________ deficit is the amount of the deficit that would exist if the current g and t were applied given full employment.

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RajarshiG RajarshiG · Answer 1 · 2022-08-24T13:20:11+02:00

A structural deficit is the amount of the deficit that would exist if the current g and t were applied given full employment.

The deficit that would arise in a full employment scenario for the economy is known as the structural deficit.

Indications of structural deficit are-

A rise in interest rates as a percentage of GDP. As a result, a larger portion of tax income would be used to pay debt interest.

Rising bond yields are a result of markets' reluctance to purchase government debt.

High inflation can exacerbate the problem. The central bank can always be counted on by the government to print money and keep liquidity levels high .

Long budgetary concerns, such as increased health-care and pension spending requirements can also lead to the deficit.

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