The size of the budget deficit is a good indicator of the fiscal policy stance being pursued by the government.

Question

Quizplus · Accepted Answer

The size of the budget deficit alone does not accurately indicate the fiscal policy stance because it does not distinguish between cyclical factors (like changes in economic activity affecting tax revenues and spending) and discretionary fiscal actions (deliberate changes in taxation and spending by the government).

The Size of the Budget Deficit Is a Good Indicator