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.

potential GDP

national debt

real GDP

foreign debt

Answer 1

The correct answer is potential GDP.

Evaluating the status of fiscal policy often involves examining budget deficits and surpluses in relation to potential GDP, as this helps determine whether the fiscal stance is appropriate given the economy's capacity to grow.