QUESTION 53 (5 marks)
The second row removes estimated cyclical effects using unchanged policy settings. Calculate the headline deficit, structural deficit and cyclical contribution. Explain why recovery alone may not return the budget to balance.
Practice marking scheme
Answer
Headline deficit $60b; structural deficit $15b; cyclical contribution $45b.
Working
Actual deficit = 630 − 570 = 60. At normal activity the deficit remains 625 − 610 = 15. The cyclical component is therefore 45. Recovery may restore receipts and reduce some transfers, but the underlying $15 billion gap remains unless policy or structural conditions change. These are estimates, not directly observed counterfactual outcomes.
Marking criteria
- Calculates headline and structural deficits. [2 marks]
- Calculates the $45 billion cyclical component. [1 mark]
- Explains the persistent gap and estimation qualification. [2 marks]
Practice question aligned to the current QCAA syllabus; review the worked solution and marking criteria.
View the QCAA syllabusCompare your working with the guide above.