In 2017, Country A has net taxes of $30 million and government expenditures of $35 million.Private saving in Country A is $5 million and consumption expenditure is $80 million.The government of Country A is running a budget _______ and national saving is _______.
A)surplus; $25 million
B)deficit; $5 million
C)surplus; $5 million
D)deficit; zero
E)deficit; - $5 million

Question

Quizplus · Accepted Answer

The government is running a budget deficit because its expenditures ($35 million) exceed its net taxes ($30 million). National saving is calculated as private saving plus government saving (net taxes minus government expenditures), which in this case is $5 million (private saving) + ($30 million - $35 million) = $0, indicating zero national saving.

In 2017, Country a Has Net Taxes of $30 Million