Cyclical budget deficits refer to
A)the fact that deficits increase during expansions and decrease during contractions
B)the fact that deficits increase during contractions and decrease during expansions
C)the size of the deficit after the economy has gone through a complete business cycle
D)the size of the deficit when the economy is at potential GDP
E)none of the above

Question

Quizplus · Accepted Answer

Cyclical budget deficits occur because government revenues decrease and expenditures increase during economic contractions, leading to higher deficits, and the opposite happens during expansions.

Cyclical Budget Deficits Refer to