In year 1, the actual budget deficit was $200 billion and the standardized deficit was $150 billion. in year 2, the actual budget deficit was $225 billion and the standardized deficit was $175 billion. gdp was $1000 billion in year 1 and $1005 billion in year 2. it can be concluded that fiscal policy from year 1 to year 2 was: 
a. proportional

b. inflationary

c. contractionary

d. expansionary

Option (D) is correct.

Explanation:

From the information given in the question, it was observed that fiscal policy in year 2 is expansionary by comparing it with the fiscal policy in year 1.

The budget deficit in year 1 is $200 billion and in year 2 is $225 billion, so there is an increase in the budget deficit from year 1 to year 2. This means that there is an implementation of expansionary policy either by increasing government spending or decreasing taxes.

On the other hand, standardized deficit also increases from year 1 to year 2, which is also an indication of expansionary fiscal policy.

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