Question

There are two types of government budget deficit which are:

Cyclical deficit and Structural deficit

For your initial discussion post, consider your textbook and lecture readings and the information provided in the article as you answer the prompts below:

In your opinion, what type of government budget deficit do you think United States government is running? Explain your reasoning. Provide your recommendations for relief from this issue.

Answer 1

Deficit is situation where government revenue is than it's expenditure. Deficit could be of two types: cyclical deficit occurs when economy faces recession while structural deficit takes place during the full employment.

Presently, US economy is facing situation of full employment. Unemployment rate is 3.7% which is below the natural rate of unemployment. Thus, current deficit is called structural deficit.

Government needs to rationalize it's social programs and expenditure on military and unproductive aids must be reduced. This is right time to reduce the deficit else if crisis hits economy, deficit will spiral out. Unnecessary tax rebates and concessions must be reduced or done away