Question

Use some of the information below to determine which statement is TRU

Corporate profits: 50 Depreciation: 31
Exports: 95
Government Purchases of Goods and Services: 300
Government Transfer Payments: 250 Gross Private Domestic Investment: 180
Imports: 119
(Net) Indirect Business Taxes: 7
Net Factor Payments to Rest of World: 25. Personal Consumption Expenditures: 614 Total government tax and fee revenue: 368 Wages and Salaries: 829
A. The budget surplus is 10
B. The budget deficit is 182
C. The budget surplus is 58
D. The budget deficit is 192
E. The budget deficit is 217

Answer 1

The government has a budget deficit of 182, which is calculated by subtracting the total government spending (550) from the total government tax and fee revenue (368). Option B is correct.

Step-by-step explanation:

To determine whether the government has a budget deficit or surplus, we subtract the total government spending from its total tax and fee revenue. In this case:

• Total Government Purchases of Goods and Services: 300
• Government Transfer Payments: 250
• Total Government Spending = 300 + 250 = 550
• Total Government Tax and Fee Revenue: 368

To find the budget balance, we calculate:

368 (Total tax and fee revenue) - 550 (Total government spending) = -182.

Since the result is negative, the government has a budget deficit of 182.