CFA Practice Question

There are 341 practice questions for this study session.

CFA Practice Question

Automatic stabilizers will tend automatically to promote a budget ______.
A. deficit during an economic boom
B. deficit during a recession
C. surplus during a recession
Explanation: Automatic stabilizers institute counter-cyclical fiscal policy automatically, that is, a budget deficit during a recession and a budget surplus during an economic boom.

User Contributed Comments 3

User Comment
Eckhardt1978 always think on corporate profits as a good example. during a recession --> less profits --> less taxes on profits --> higher budget deficits.
soarer1 Good explanation Eckhardt
nayra yeah good explanation thanks
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