Suppose that a country's government expenditures are $400 billion, net taxes are $300 billion, saving is $300 billion, and investment is $250 billion.This country has a government budget
A)deficit and a private sector deficit.
B)surplus and a private sector deficit.
C)surplus and a private sector surplus.
D)surplus and a private sector balance.
E)deficit and a private sector surplus.

Question

Quizplus · Accepted Answer

Government budget deficit = Government expenditures - Net Taxes = $400 billion - $300 billion = $100 billion.
Private sector surplus = Saving - Investment = $300 billion - $250 billion = $50 billion.

Therefore, the country has a government budget deficit and a private sector surplus. The answer is E.

Suppose That a Country's Government Expenditures Are $400 Billion, Net