Where Y is GDP, C is consumption, I is investment, (G )is government spending, (T )is net taxes, and there is no international trade, the government budget deficit equals:
A)T - G.
B)Y - G.
C)Y + T - G.
D)G - T.

Question

Where Y is GDP, C is consumption, I is investment, (G )is government spending, (T )is net taxes, and there is no international trade, the government budget deficit equals:
A)T - G.
B)Y - G.
C)Y + T - G.
D)G  - T.

Quizplus · Accepted Answer

In this closed economy, government spending (G)minus net taxes (T)is the definition of budget deficit. If this were a negative number, it would be a government surplus.

Where Y Is GDP, C Is Consumption, I Is Investment