Which of the following provides the best information about the direction of the government's fiscal policy?
A) changes in the Fed's holdings of U.S. government securities
B) changes in the reserve requirements of the Federal Reserve
C) changes in the nation's trade balance
D) changes in the size of the federal government's budget deficit or surplus

Question

Quizplus · Accepted Answer

Changes in the size of the federal government's budget deficit or surplus provide the best information about the direction of the government's fiscal policy, as it directly reflects the government's spending and revenue policies. When there is a deficit, it indicates that the government is spending more than it is earning, and when there is a surplus, it indicates that the government is earning more than it is spending. This reflects the government's overall stance towards its fiscal policy.

Which of the Following Provides the Best Information About the Direction