Suppose the government cuts taxes to keep the economy's cyclically adjusted budget in balance when the economy is expanding. The government is engaging in a(n)

Question

Quizplus · Accepted Answer

Cutting taxes to keep the cyclically adjusted budget in balance during an economic expansion is an example of a neutral fiscal policy. This approach aims to neither stimulate nor contract the economy but to maintain its current state.

Suppose the Government Cuts Taxes to Keep the Economy's Cyclically