cyclical deficit
A cyclical deficit refers to a temporary imbalance between government spending and revenue that occurs as a result of economic cycles. It arises when an economy experiences a downturn, leading to reduced tax revenues and increased government spending on welfare programs, unemployment benefits, and other countercyclical measures. The cyclical deficit is expected to diminish as the economy recovers and returns to a stable growth trajectory.
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Related Concepts (1)
Similar Concepts
- budget deficit
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