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 increases. The only year when this happens in the given table is Year 3, where the deficit increases from 2% to 3% of GDP.

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