The table below shows the full-employment budget deficit as a percentage of GDP over a five-year period. Refer to the above information.In which year was fiscal policy expansionary?
A)Year 2
B)Year 3
C)Year 4
D)Year 5

Question

The table below shows the full-employment budget deficit as a percentage of GDP over a five-year period.  Refer to the above information.In which year was fiscal policy expansionary?
A)Year 2 
B)Year 3 
C)Year 4 
D)Year 5

Quizplus · Accepted Answer

Fiscal policy is expansionary when the full-employment budget deficit as a percentage of GDP is increasing, indicating that the government is spending more than it is collecting in taxes. In Year 3, the percentage increased from 2.2% to 3.1%, indicating expansionary fiscal policy.

The Table Below Shows the Full-Employment Budget Deficit as a Percentage