Question

Scenario 26-1. Assume the following information for an imaginary, closed economy. GDP $100,000 Taxes $22,000 Government Purchases $25,000 National Saving $15,000 Refer to Scenario 26-1. This economy's government is running a budget a. deficit of $3,000. b. surplus of $3,000. c. deficit of $12,000. d. surplus of $12,000.

Answer 1

Based on the imaginary country's GDP, Taxes and purchases, the country is running a. a deficit of $3,000.

How is the country running a deficit?

A budget deficit describes a situation where the taxes are less than government purchases.

This is the situation in this country with taxes at $22,000 and Purchases at $25,000.

The deficit is therefore:

= 25,000 - 22,000

= $3,000

In conclusion, option A is correct.

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