Question

What do economists use to estimate the annual deficit or surplus that would occur under existing tax rates and government spending levels if the economy were to operate at full employment?
Multiple choice question.

Progressive tax system

Expansionary fiscal policy

Cyclically adjusted budget

Built-in stabilizer

Answer 1

Economists use the **Cyclically adjusted budget** to estimate the annual deficit or surplus that would occur under existing tax rates and government spending levels if the economy were to operate at full employment. This measure adjusts the budget balance for the effects of economic fluctuations, providing a clearer view of the fiscal stance without the influence of the economic cycle.