A good measure of fiscal stance is ______.

A. actual government deficit
B. structural budget deficit
C. inflation-adjusted budget deficit

Correct Answer: B

Budge deficits vary automatically with the business cycle. Revenue automatically rises as the economy expands; unemployment transfers are reduced, leaving a deficit or surplus at the cyclical peak that may be termed a "structural" budget balance. A structural budget deficit is the excess of public spending over revenues which would persist if the economy were to grow steadily at its highest sustainable employment rate.