Countercyclical fiscal policy is best described by which of the following statements?
A) Government surpluses are planned during economic booms, and deficits are planned during economic recessions.
B) The annual budget should always be balanced.
C) Deficits should always equal surpluses.
D) Government deficits are planned during economic booms, and surpluses are planned during economic recessions.

Question

Quizplus · Accepted Answer

Countercyclical fiscal policy involves increasing government spending or decreasing taxes during economic downturns (recessions) and decreasing government spending or increasing taxes during economic booms. This approach aims to stabilize the economy by counteracting the business cycle, hence planning government surpluses during booms and deficits during recessions.

Countercyclical Fiscal Policy Is Best Described by Which of the Following