Chapter 6R, Problem 2MCQ

To determine

Effect of cyclically adjusted budget deficit on the actual budget deficit.

Explanation of Solution

In simple word, the cyclically adjusted budget refers to the budget which takes into consideration the effects of business cycle as well as business environment. The cyclically adjusted balance are more useful than the actual budget since they take more macro factors into consideration and provides more accurate picture of the present as well as for the future.

Thus, from the above we can conclude that the correct option is E.