Final answer:
Both the level and change of the deficit matter in fiscal policy, as changes occur naturally over the business cycle due to economic fluctuations.
Step-by-step explanation:
Fiscal policy refers to the ways in which the government influences the economy through changes in taxation and spending. When it comes to the impact of fiscal policy on the deficit, both the level and change of the deficit matter. A change in the deficit naturally occurs over the business cycle due to economic fluctuations.
For example, during an economic downturn, government spending may increase and tax revenues may decrease, leading to a larger deficit. On the other hand, during an economic expansion, tax revenues may rise and government spending may decrease, resulting in a smaller deficit.