The Great Recession of 2007-09 and the consequent policy response made the
A) actual budget deﬁcit become very close to the cyclically adjusted deﬁcit during that period.
B) actual budget deﬁcit shrink during that period.
C) cyclically adjusted deﬁcit grow during that period.
D) cyclically adjusted budget balance turn positive during that period.

Question

Quizplus · Accepted Answer

The cyclically adjusted deficit grew during that period because the government increased spending and implemented tax cuts to stimulate the economy, which increased the deficit when adjusted for the economic cycle.

The Great Recession of 2007-09 and the Consequent Policy Response