Suppose Country A had net taxes of $30 million and government expenditures of $35 million. In addition, household saving in Country A totalled $5 million while consumption was $80 million. The government of Country A is running a budget and national saving is million.
A) surplus; $25
B) deficit; $5
C) deficit; -$5
D) surplus; $5

Question

Quizplus · Accepted Answer

National saving = Household saving + Government saving 
Government saving = net taxes - government expenditures 
Thus, 
Government saving = $30 million - $35 million 
= -$5 million (deficit) 
Total national saving = $5 million + (-$5 million) = 0 
Therefore, the government of Country A is running a deficit and national saving is -$5 million.

Suppose Country a Had Net Taxes of $30 Million and Government