In Year 1, the actual budget deficit was $150 billion and the cyclically adjusted deficit was $125 billion. In Year 2, the actual budget deficit was $130 billion and the cyclically adjusted deficit was $125 billion. It can be concluded that from Year 1 to Year 2 a. real GDP increased. b. fiscal policy became less expansionary. c. full employment was attained d. real GDP decreased.

Question

Allisson

Business

8 March, 22:45

In Year 1, the actual budget deficit was $150 billion and the cyclically adjusted deficit was $125 billion. In Year 2, the actual budget deficit was $130 billion and the cyclically adjusted deficit was $125 billion. It can be concluded that from Year 1 to Year 2 a. real GDP increased. b. fiscal policy became less expansionary. c. full employment was attained d. real GDP decreased.

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Answers (1)

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Keon Rush · Answer 1

b. fiscal policy became less expansionary

Explanation:

Because, the actual budget deficit (government spending less taxes and other) decreases the State decrease theri participation in the aconomy by the 20 millons difference.

This means their welfare programs, military, political, public works and other spending decreases. It could also mean the taxes were raised to make up for the deficit.

In both, the government policy contracts a little bit.