The Cyclically Adjusted Budget Balance Is an Estimate Of

question 343

Multiple Choice

The cyclically adjusted budget balance is an estimate of:

• A)the contractionary fiscal policy needed to close an inflationary gap.
• B)the tax increase needed to compensate for larger government transfers so that the budget remains balanced.
• C)the expansionary fiscal policy needed to close a recessionary gap.
• D)what the budget balance would be if real GDP were exactly equal to potential output.

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