When current government expenditures equal current tax revenues and the economy is achieving full employment,
A)the cyclically adjusted budget has neither a deficit nor a surplus.
B)the cyclically adjusted budget may have either a deficit or a surplus.
C)fiscal policy is contractionary.
D)nominal GDP and real GDP are equal.

Question

Quizplus · Accepted Answer

When the economy is at full employment and government expenditures equal tax revenues, the cyclically adjusted budget is balanced, meaning there is neither a deficit nor a surplus.

When Current Government Expenditures Equal Current Tax Revenues and the Economy