Suppose the government purposely changes the economy's cyclically adjusted budget from a deﬁcit of 0 percent of real GDP to a deﬁcit of 3 percent of real GDP. The government is engaging in a(n)

Question

Quizplus · Accepted Answer

By intentionally increasing the cyclically adjusted budget deficit, the government is engaging in expansionary fiscal policy, meaning they are increasing government spending and/or cutting taxes to stimulate economic growth.

Suppose the Government Purposely Changes the Economy's Cyclically Adjusted Budget