Answer the following statements true (T) or false (F)
1. The key to assessing whether fiscal policy is expansionary or not is to observe the change in the cyclically-adjusted budget balance.
2. 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.
3. The actual and cyclically-adjusted budgets will be equal when the economy is at full employment.
4. If the cyclically-adjusted budget deficit goes from 2% to 1% of GDP, then it indicates that fiscal policy has turned more contractionary.
1. True
2. False
3. True
4. True
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When net taxes increase and government purchases decrease, _____
a. the price level will rise b. money supply must rise c. the aggregate demand curve shifts leftward d. output and employment increase e. the aggregate supply curve shifts leftward
The structural deficit does not depend on the state of the economy
a. True b. False Indicate whether the statement is true or false