•Structural Surplus/Deficit – the budget with business cycle
effects removed
–A hypothetical measure to gauge how much fiscal policy will influence the
economy after extracting the effects of the current state of the
economy
–Compare current government spending (G) with what tax revenues (T)
would be at full employment (even if not there now). The difference
between these is the structural surplus (if T > G) or deficit (if G > T)
–Fiscal policy is expansionary when there is a structural deficit (not
necessarily with an actual deficit)
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