If the Cyclically Adjusted Budget Has a Zero Deficit but the Actual

question 372

True/False

If the cyclically adjusted budget has a zero deficit but the actual budget has a $100 billion deficit, then
that means that the government is pursuing an expansionary fiscal policy.

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Definitions:

Zero Coupon Interest Rate

An interest rate that applies to a bond or loan that does not pay periodic interest, only paying the face value at maturity.

Arbitrage Profit

The profit realized from exploiting the price difference of the same or similar financial instruments on different markets or in different forms.

Stock Index

A statistical measure which tracks the performance of a basket of stocks, representing a segment of the stock market.

T-bond Futures

Futures contracts that obligate the buyer to purchase U.S. Treasury bonds at a specified price at a future date, used for hedging and investing purposes.