The cyclically adjusted budget deficit:
A)is no different from the actual budget deficit.
B)fluctuates less than the actual budget deficit.
C)fluctuates more than the actual budget deficit.
D)remains unchanged throughout the business cycles.

Question

Quizplus · Accepted Answer

The cyclically adjusted budget deficit fluctuates less than the actual budget deficit because it is adjusted for the impacts of the business cycle. By removing the effects of temporary economic fluctuations, it provides a more accurate picture of the government's underlying fiscal position.

The Cyclically Adjusted Budget Deficit