If you are told that the government had an actual budget deficit of $50 billion, then you would:
A) Know that fiscal policy was expansionary
B) Know that fiscal policy was contractionary
C) Know that fiscal policy was producing a cyclical deficit
D) Not be able to determine the direction of fiscal policy from the information given

Question

Quizplus · Accepted Answer

The information given only tells us that the government had a budget deficit of $50 billion. It does not provide information on the direction of fiscal policy (expansionary or contractionary) or whether the deficit is cyclical or structural. Therefore, we cannot determine the direction of fiscal policy from this information alone.

If You Are Told That the Government Had an Actual