The cyclically adjusted budget deficit or surplus measures what the deficit or surplus would be if the economy was
A)in a recession.
B)in an expansion.
C)at potential GDP.
D)at potential tax revenue.

Question

Quizplus · Accepted Answer

The cyclically adjusted budget deficit or surplus takes into consideration the fluctuations in the economy's output that occur over the business cycle. By adjusting for those fluctuations and measuring the deficit or surplus at potential GDP, which is the economy's long-term trend rate of output, we can get a better sense of the government's fiscal position independent of the ups and downs of the business cycle.

The Cyclically Adjusted Budget Deficit or Surplus Measures What the Deficit