If capital budgeting procedures were employed, then a budget deficit would be measured as:
A) the sum of government debt.
B) the change in government debt.
C) the change in government debt minus the change in government capital assets.
D) the change in government capital assets.

Question

Quizplus · Accepted Answer

The correct answer is C) the change in government debt minus the change in government capital assets. This is because capital budgeting procedures take into account investments in capital assets, not just the change in debt. Therefore, a budget deficit under these procedures would be calculated by subtracting the increase in capital assets from the increase in debt, to reflect the net financial position after accounting for capital investments.

If Capital Budgeting Procedures Were Employed, Then a Budget Deficit