The cyclically adjusted surplus as a percentage of GDP is 1 percent in Year 1.This surplus becomes a deficit of 2 percent of GDP in Year 2.It can be concluded that from Year 1 to Year 2,
A)fiscal policy turned more expansionary.
B)fiscal policy turned more contractionary.
C)GDP increased.
D)GDP decreased.

Question

Quizplus · Accepted Answer

A shift from a surplus to a deficit indicates that the government is spending more relative to its revenue, which is characteristic of an expansionary fiscal policy.

The Cyclically Adjusted Surplus as a Percentage of GDP Is