If the government fiscal deficit equals $78 billion, government borrowing equals $38 million, and tax revenue equals $92 billion, what is the value of the change in the money supply?

Question

Quizplus · Accepted Answer

The formula for change in the money supply is:
Change in Money Supply = Government Borrowing - Fiscal Deficit
Change in Money Supply = $38 million - $78 billion
Change in Money Supply = -$77.962 billion
Since the answer options are in billions, the answer is closest to option A: $40 billion. The negative sign indicates a decrease in the money supply, so the answer is -$77.962 billion, which is closest to -$40 billion. Therefore, A is the best choice.

If the Government Fiscal Deficit Equals $78 Billion, Government Borrowing