The cyclically adjusted budget deﬁcit for the United States
A) rose to −7.6 percent of potential GDP in 2009 but has since declined.
B) was zero in 2009, but the cyclical deﬁcit created by the recession was −7.6 percent of potential GDP.
C) changed to a surplus in 2009.
D) rose to −10.1 percent of potential GDP in 2009 but has since declined.

Question

Quizplus · Accepted Answer

The cyclically adjusted budget deficit for the United States indeed rose to -7.6 percent of potential GDP in 2009 as a result of the financial crisis and subsequent recession, and it has declined in the years following as the economy recovered.

The Cyclically Adjusted Budget Deﬁcit for the United States