The Cyclically-Adjusted Surplus as a Percentage of GDP Is 1

question 28

Multiple Choice

The cyclically-adjusted surplus as a percentage of GDP is 1 percent in Year 1. This surplus becomes a deficit of 2 percent of GDP in Year 2. It can be concluded from Year 1 to Year 2 that:

• A) Fiscal policy turned more expansionary
• B) Fiscal policy turned more contractionary
• C) GDP increased
• D) GDP decreased

---

Definitions:

Independent Events

Two or more events that have no impact on the likelihood of each other's occurrence.

P(A And B)

The chance of event A occurring together with event B.

Lone Pair

A pair of valence electrons that are not involved in bonding but occupy space around an atom.

Strongly Basic

A substance or solution with a very high pH, typically greater than 11, indicating a high concentration of hydroxide ions.