A cyclically adjusted budget balance:
A)shows what the budget balance would be with a significant amount of cyclical unemployment.
B)is an estimate of what the budget balance would be if real GDP were equal to potential output.
C)is a good indicator of the structural deficit in the economy.
D)is the same as the national debt, and it rises as interest cost is accrued.

Question

Quizplus · Accepted Answer

A cyclically adjusted budget balance is an estimate of what the budget balance would be if real GDP were equal to potential output. It takes into account the effects of cyclical fluctuations and provides a better indication of the underlying structural position of a country's budget.

A Cyclically Adjusted Budget Balance