In Year 1, the actual budget deﬁcit was $200 billion and the cyclically adjusted deﬁcit was $150 billion. In Year 2, the actual budget deﬁcit was $225 billion and the cyclically adjusted deﬁcit was $175 billion. It
Can be concluded that ﬁscal policy from Year 1 to Year 2 became more
A) proportional.
B) progressive.
C) contractionary.
D) expansionary.

Question

Quizplus · Accepted Answer

The increase in both the actual budget deficit and the cyclically adjusted deficit from Year 1 to Year 2 indicates that fiscal policy became more expansionary, as the government either increased spending or decreased taxes to stimulate the economy.

In Year 1, the Actual Budget Deﬁcit Was $200 Billion