Macroeconomics 11th Edition by Michael Parkin

Exercise 33

An economy is in a recession, the recessionary gap is large, and the economy has a budget deficit.
a. Do we know whether the budget deficit is a structural deficit or a cyclical deficitExplain your answer.
b. Do we know whether automatic fiscal policy is increasing or decreasing the output gapExplain your answer.
c. If a discretionary increase in government expenditure occurs, what happens to the structural deficitExplain.