The direction of discretionary fiscal policy cannot be examined by a simple look at the changes in the actual budget deficits or surpluses.This is because:
A)those changes may reflect the changes in the general price level.
B)those changes may reflect automatic changes in the tax revenues as a result of change in GDP.
C)those changes may reflect the changes in the tax revenues as a result of change in imports.
D)it is impossible to calculate the changes in the actual budget deficits or surpluses.

Question

Quizplus · Accepted Answer

Automatic changes in tax revenues due to changes in GDP can affect budget deficits or surpluses, making it difficult to assess discretionary fiscal policy direction solely by looking at these changes.

The Direction of Discretionary Fiscal Policy Cannot Be Examined by a Simple