The cyclically adjusted budget deficit calculates the budget surplus or deficit at
A)real GDP.
B)potential GDP.
C)nominal GDP.
D)average GDP.

Question

Quizplus · Accepted Answer

The cyclically adjusted budget deficit takes into account the economy's potential GDP, which is the level of output that can be achieved with full employment and without inflationary pressures. By using potential GDP as the benchmark, the cyclically adjusted budget deficit provides a better measure of the government's long-term fiscal position, as it removes the effects of cyclical fluctuations in the economy.

The Cyclically Adjusted Budget Deficit Calculates the Budget Surplus or Deficit