Question:

What was the cyclical budget deficit in $2007?$ Did the cyclical budget deficit reduce or increase the actual budget deficit?

$-14$ billion; The cyclical budget balance was actually a cyclical budget surplus, which means the actual deficit was reduced because the economy was operating above potential output

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$+7$ billion; The cyclical budget deficit added to the actual budget deficit because the economy was operating below potential output

$-7$ billion; The cyclical budget balance was actually a cyclical budget surplus, which means the actual deficit was reduced because the economy was operating above potential output

$+14$ billion; The cyclical budget deficit added to the actual budget deficit because the economy was operating below potential output