The best measure of the change in the stance of a government's fiscal policy is

Question

Quizplus · Accepted Answer

The cyclically adjusted deficit is the best measure of the change in the stance of a government's fiscal policy because it takes into account the cyclical fluctuations in the economy and provides a more accurate picture of the underlying fiscal position. It reflects whether a government is intentionally stimulating or tightening the economy, regardless of whether the deficit is increasing or decreasing in absolute terms. A change in the cyclically adjusted deficit thus represents a deliberate policy shift, whereas changes in the actual or primary budget deficits can be influenced by cyclical factors outside of the government's control.

The Best Measure of the Change in the Stance of a Government's