The cyclically adjusted budget balance is an estimate of A t

The cyclically adjusted budget balance is an estimate of: A the expansionary fiscal policy needed to close a recessionary gap the tax increase needed to compensate for larger government transfers so that the budget remains balanced. The contractionary fiscal policy needed to close an inflationary gap. What the budget balance would be if real GDP were exactly equal to potential output. The federal fundsrate is the interest rate on and it is controlled by the reserves that banks lend to each other: Federal Open Market Committee loans from the Federal Reserve to banks: president and Congress loans from the Federal Reserve to banks; Federal Open Market Committee If the economy is at potential output and consumption spending suddenly decreases because of a fail in consumer

Solution

Answer 37: The tax increase needed to compensate for larger government transfer so that budget remain in balance.

During recession, people lose their jobs and hence government\'s liability to pay unemployment allowance increases. In order to compensate this, government increases taxes.

Answer38: D. The loans from federal reserve to banks and it iset by Open Market Operations committee

federal Funds rate is primarily determined by the balance of supply and demand for the funds. But it fluctuates. A target rate is set by the Federal Open Market Committee (FOMC) but the actual rate that\'s used overnight can be higher or lower, depending on supply of funds and the demand bybanks for loans.