During an economic downturn, a country's total budget deficit increases from £25 billion to £65 billion. If the structural budget deficit remains constant at £10 billion, which of the following is correct?
Discretionary fiscal policy has become expansionary, and the cyclical deficit has increased by £40 billion.
Discretionary fiscal policy has remained unchanged, and the cyclical deficit has increased by £40 billion.
Discretionary fiscal policy has remained unchanged, and the structural deficit has increased by £30 billion.
Discretionary fiscal policy has become expansionary, and the cyclical deficit has increased by £30 billion.
245 exam-style questions on AQA A Level Economics 2.5 Fiscal policy and supply-side policies, covering 2.5.1 Fiscal policy and 2.5.2 Supply-side policies. Each one has a worked solution and a mark scheme showing where the marks go.