Year Actual Budget, Percent of GDP ( − deficits , + surpluses ) Cyclically - Adjusted Budget, Percent of GDP ( − deficits , + surpluses )
1 0 0
2 − 3 0
3 − 5 − 2
4 − 2 − 2
5 + 2 + 1
Refer to the data for a fictional economy. The changes in the budget conditions between Year 1 and 2 best reflect
Multiple Choice
O demand - pull inflation.
O an expansionary fiscal policy.
O a recession.
O a contractionary fiscal policy.