A cyclically adjusted budget deficit accounts for the effect of _____ on the budget deficit.

Question

Quizplus · Accepted Answer

A cyclically adjusted budget deficit takes into account the effect of economic fluctuations on the budget deficit, including both economic expansions and recessions. It is calculated by adjusting for the cyclical components of government revenue and spending, which can fluctuate with the business cycle. Therefore, options A, B, and C are incorrect as they do not fully capture the cyclical nature of the budget deficit.

A Cyclically Adjusted Budget Deficit Accounts for the Effect of _____