An estimate of what government spending and tax revenue would be if the economy were operating at its natural rate of output and employment is called the ______ budget.

Question

Quizplus · Accepted Answer

A budget that is adjusted for the cyclical fluctuations of the economy aims to show policymakers what the budget would look like if the economy was operating at its potential level of output and employment. This provides policymakers with a clearer understanding of the underlying budgetary position, which could be used to guide fiscal policy decisions. Therefore, the correct answer is A) cyclically adjusted budget.

An Estimate of What Government Spending and Tax Revenue Would