The effect of changes in economic activity on the budget deficit is called
A)fine tuning.
B)debt monetization.
C)the structural deficit.
D)tax smoothing.
E) none of the above

Question

Quizplus · Accepted Answer

The effect of changes in economic activity on the budget deficit is not specifically referred to as fine tuning, debt monetization, the structural deficit, or tax smoothing. These terms relate to different economic concepts or strategies. Fine tuning refers to adjustments in economic policy to manage economic fluctuations, debt monetization involves financing government debt by increasing the money supply, the structural deficit is the part of the budget deficit that is independent of the business cycle, and tax smoothing is a strategy to minimize distortions from taxation over time. The effect of economic activity on the budget deficit is more broadly related to cyclical deficits or automatic stabilizers, but none of the provided options directly describe this relationship.

The Effect of Changes in Economic Activity on the Budget