Which of the following statements is correct?
A)The cyclically adjusted budget and the actual budget differ because the latter does not take government transfer payments into account.
B)The cyclically adjusted budget is less likely to show a deficit than is the actual budget.
C)The cyclically adjusted budget and the actual budget will show the same size deficit or surplus in any given fiscal year.
D)The cyclically adjusted budget is more likely to show a deficit than is the actual budget.

Question

Quizplus · Accepted Answer

The cyclically adjusted budget accounts for the effects of the economic cycle, removing temporary fluctuations. It often shows a smaller deficit or larger surplus than the actual budget during economic downturns, as it reflects what the budget balance would be under normal economic conditions.

Which of the Following Statements Is Correct