Question

If income is 4,800, consumption is 3,500, government spending is 1,000, and taxes minus transfers are 800, public saving is:

A. 200
B. 300
C. 500
D. 1,800

Answer 1

The public saving is calculated as the difference between taxes and government spending. In this case, the public saving is -$200, indicating a budget deficit.

Step-by-step explanation:

The question asks us to find the public saving given the income, consumption, government spending, and taxes minus transfers. The formula to calculate public saving is the government income (taxes minus transfers) minus its spending. Using the values provided in the question, the calculation would be:

Public Saving = Taxes - Government Spending = $800 - $1,000 = -$200. However, in the context of choices given, none equate to -$200, suggesting there may be a misunderstanding or typo in the question. Typically, a positive public saving indicates a budget surplus, and a negative value indicates a budget deficit.