Suppose that the government debt is $100 million at the beginning of the year. If government collects $55 million in taxes and incurs $50 million in expenditures this year, then the government is experiencing a _______ and the debt will be _______ at the end of the year.

Question

Quizplus · Accepted Answer

The government collects more in taxes ($55 million) than it spends ($50 million), resulting in a surplus of $5 million. Therefore, the debt will decrease by $5 million, making it $95 million at the end of the year.

Suppose That the Government Debt Is $100 Million at the Beginning