If the cyclically adjusted budget shows a deficit of zero and the actual budget shows a deficit of about $150 billion, it can be concluded that there is
A)built-in stability.
B)a cyclical deficit.
C)an expansionary fiscal policy.
D)a contractionary fiscal policy.

Question

Quizplus · Accepted Answer

A cyclical deficit occurs when the actual budget deficit is larger than the cyclically adjusted budget deficit, indicating that the economy is operating below its potential output due to the business cycle.

If the Cyclically Adjusted Budget Shows a Deficit of Zero