Economists sometimes look at the cyclically adjusted budget balance in order to determine:
A) the domestic budget balance.
B) the fiscal stance after adjusting for automatic stabilisers.
C) the fiscal stance after adjusting for inflation.
D) the fiscal stance after adjusting for government spending on imports.

Question

Quizplus · Accepted Answer

The cyclically adjusted budget balance, also known as the structural budget balance, is a measure of the fiscal stance after adjusting for automatic stabilizers. Automatic stabilizers refer to the changes in tax revenue and government spending that naturally occur during economic cycles, such as higher tax revenue and lower spending during expansions and vice versa during contractions. By adjusting for these changes, the cyclically adjusted budget balance provides a clearer picture of a government's underlying fiscal policies and their impact on the economy.

Economists Sometimes Look at the Cyclically Adjusted Budget Balance in Order