If the cyclically adjusted budget shows a deficit of about $100 billion and the actual budget shows a deficit of about $150 billion, it can be concluded that there is:
A)built-in stability.
B)a cyclical deficit.
C)an expansionary fiscal policy.
D)a contractionary fiscal policy.

Question

Quizplus · Accepted Answer

The cyclically adjusted budget is an estimate of what the budget balance would be if the economy were at a "normal" level of activity, while the actual budget reflects the current state of the economy. Therefore, the difference between the two deficits indicates a cyclical deficit, which is caused by changes in economic activity.

If the Cyclically Adjusted Budget Shows a Deficit of About