The cyclically adjusted budget estimates the federal budget deﬁcit or surplus if
A) the rate of inﬂation were zero.
B) the economy were at full employment.
C) the MPC were zero.
D) the government had a balanced budget.

Question

Quizplus · Accepted Answer

The cyclically adjusted budget estimates the federal budget deficit or surplus if the economy were at full employment, meaning that it takes into account the changes in tax revenue and government spending that occur during a business cycle. This helps to provide a more accurate assessment of the budgetary situation and helps to inform policy decisions. The other options do not capture this consideration of the business cycle.

The Cyclically Adjusted Budget Estimates the Federal Budget Deﬁcit or Surplus