Q. With reference to types of fiscal deficit, consider the following statements:
1.A structural deficit occurs due to temporary economic downturns such as recessions.
2.A cyclical deficit emerges even when the economy is at full employment.
Which of the statements given above is/are correct?
Answer: D
Notes:
Explanation:
- Structural deficit is independent of economic cycles; it persists even during upswings.
- Cyclical deficit occurs when the economy is not at full potential, e.g., during a recession.
Source: Indian Economy (NCERT)
