The size of the actual budget balance is a good indicator of whether the fiscal policy is expansionary or contractionary.

Question

Quizplus · Accepted Answer

The actual budget balance can be affected by the state of the economy and does not directly indicate whether fiscal policy is expansionary or contractionary. Instead, the structural budget balance, which adjusts for the economic cycle, provides a better indication of fiscal policy stance.

The Size of the Actual Budget Balance Is a Good