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Suppose the Government Purposely Changes the Economy's Cyclically Adjusted Budget

Question 327

Multiple Choice

Suppose the government purposely changes the economy's cyclically adjusted budget from a deficit of 3 percent of real GDP to a surplus of 1 percent of real GDP. The government is engaging in a(n)


A) expansionary fiscal policy.
B) contractionary fiscal policy.
C) neutral fiscal policy.
D) high-interest-rate policy.

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