War cost could be higher than initially predicted.

Sites to Visit for More Information:

1. HM Treasury
2. Resources for Economists on the Internet

Questions:

1. Explain the difference between a cyclical deficit and a structural deficit.
2. Is an increase in a government budget deficit that is the result of the war in Iraq an increase in the structural deficit or an increase in the cyclical deficit?
3. What effect if any does a government budget deficit have on future economic growth?
4. Does spending on the war effect have a multiplier effect on the UK economy?

Chapters: 23, 24

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