Economics · Fiscal Deficits and Cyclical Downturns
Arrange the following economic events in the logical sequence describing the operation of a cyclical deficit, starting from the onset of an economic downturn: 1. Automatic rise in transfer payments and welfare spending 2. Economy operates below its potential output (negative output gap) 3. Disappearance of the deficit component as the economy recovers 4. Automatic decline in tax revenues 5. Increase in the cyclical component of the fiscal deficit
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 15, 4, 1, 2, 3
- 22, 3, 5, 4, 1
- 31, 2, 4, 5, 3
- 42, 4, 1, 5, 3✓
Correct answer
2, 4, 1, 5, 3
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