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Lilliput is a country that has closed borders and does not import or export any goods or services; hence, they do not worry about trade with other countries. Total spending for the federal government of Lilliput for the last fiscal year was $4.71 billion. The country collected $4.83 billion in taxes during this same fiscal year. Assume government transfers were zero.

Based on this information, what is Lilliput's budget balance?

budget balance:________ $ billion

In the last fiscal year, Lilliput was running

a. a balanced budget
b. a budget deficit
c. a budget surplus

1 Answer

3 votes

Answer:

$0.12 billion; a budget surplus

Step-by-step explanation:

Given that,

Total spending for the last fiscal year = $4.71 billion

Tax collected during the same fiscal year = $4.83 billion

Government transfers = $0

Lilliput's budget balance:

= (Taxes - Government transfers) - Total spending of government

= ($4.83 billion - $0) - $4.71 billion

= $0.12 billion

Therefore, the Lilliput has a budget surplus during the last fiscal year because of the positive budget balance.

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