Suppose that the government debt is $100 million at the beginning of the year. If the government collects $45 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 is experiencing a deficit because expenditures ($50 million) exceed taxes collected ($45 million) by $5 million. Therefore, the debt will increase by $5 million, resulting in a total debt of $105 million at the end of the year.

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