brandyg8955 brandyg8955
  • 22-04-2018
  • Social Studies
contestada

Why is the cyclical adjusted budget balnce a better measure of long run sustainability of government policies than the actual budget balance?

Respuesta :

andriansp andriansp
  • 02-05-2018
Because cyclical adjusted  Budget balance would give the estimation of what the balance would be if real GDP were exactly equal to potential output.
In the long-run GDP would move closer to the amount in potential output. So using Cyclical adjusted Budget would give better projection to maintain long-term sustainability.
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