The data below provides the Actual and Structural Budget Deficits,as a percentage of real GDP,for Canada between 1999 and 2010.Note that a negative value in the table indicates a budget surplus. TABLE 31-2 Refer to Table 31-2.Based on the data in the table,over which of the following intervals was fiscal policy expansionary?

Question

The data below provides the Actual and Structural Budget Deficits,as a percentage of real GDP,for Canada between 1999 and 2010.Note that a negative value in the table indicates a budget surplus.  TABLE 31-2 Refer to Table 31-2.Based on the data in the table,over which of the following intervals was fiscal policy expansionary?

Quizplus · Accepted Answer

Fiscal policy is expansionary when the government increases its spending and/or reduces taxes to stimulate demand and boost economic activity. In the table, we can see that the structural budget deficit is rising between 1999 and 2003, which means that the government is consistently spending more than it is collecting in revenue, even after accounting for cyclical fluctuations in the economy. This indicates a deliberate policy to stimulate demand and boost economic growth, making choice B the correct answer. The other options do not reflect a clear expansionary fiscal policy.

The Data Below Provides the Actual and Structural Budget Deficits,as