The table below shows aggregate values for a hypothetical economy.Suppose this economy has real GDP equal to potential output. TABLE 25-3 Refer to Table 25-3.What is the level of combined budget surpluses of all levels of government in this economy?

Question

The table below shows aggregate values for a hypothetical economy.Suppose this economy has real GDP equal to potential output.  TABLE 25-3 Refer to Table 25-3.What is the level of combined budget surpluses of all levels of government in this economy?

Quizplus · Accepted Answer

The level of combined budget surpluses can be calculated by subtracting the sum of transfer payments and government purchases from the sum of taxes and other revenues. In this case, that is: $200 + $300 - ($500 + $200) = -$200. This means that the combined budget is in deficit, not surplus, so the answer is option D, -$200.

The Table Below Shows Aggregate Values for a Hypothetical Economy