The cyclically adjusted budget balance refers to:
A)the size of the budget in the current year.
B)the average size of the budget over the long run.
C)the swings in the budget as the business cycle changes.
D)the budget balance if actual output were equal to potential output.

Question

Quizplus · Accepted Answer

The cyclically adjusted budget balance is the budget balance that would result if the economy were operating at its potential level of output. It adjusts for the effects of the business cycle on tax revenues and government spending. Therefore, the correct answer is D - the budget balance if actual output were equal to potential output.

The Cyclically Adjusted Budget Balance Refers To