Evaluating the status of fiscal policy requires comparing the sizes of adjustments in budget deficits and surpluses according to the level of Blank______.

Question

Multiple choice question.

national debt

foreign debt

potential GDP

real GDP

Answer 1

To evaluate the status of fiscal policy, you would compare the sizes of adjustments in budget deficits and surpluses according to the level of real GDP.

Real GDP is used because it provides a measure of the economy's actual output, allowing for a clearer understanding of the fiscal position relative to the economy's size and growth.