What provides the information needed to assess discretionary policy and determine whether it is expansionary, contractionary, or neutral?

Question

Multiple choice question.

Cyclically adjusted budgets

The crowding-out effect

Built-in stabilizers

Actual deficits

Answer 1

The correct answer is Cyclically adjusted budgets.

Cyclically adjusted budgets provide information that allows analysts to assess the stance of discretionary fiscal policy by removing the effects of the business cycle. This helps to determine whether the policy is expansionary, contractionary, or neutral.