- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 3. Fiscal Policy
- Subject 4. Fiscal Policy Implementation
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 |