Table 15.1 $\begin{array}{l|r} \text { Federal govermment purchases of } & \ \text { goods and services } & \$ 455 \text { million } \ \hline \text { Transfer payments } & \$ 85 \text { million } \ \hline \text { Tax revenue } & \$ 405 \text { million } \ \hline \text { Interest payment on existing debt } & \$ 60 \text { million } \ \hline \text { Seigniorage } & \$ 10 \text { million } \ \hline \text { Newly-issued government bonds } & \$ 185 \text { million } \end{array}$ The data in the table represents budget figures for the nation of Arugula for 2012. -Refer to Table 15.1.The budget deficit for Arugula in 2012 is

Question

Quizplus · Accepted Answer

The budget deficit is calculated as follows: 
Total expenditures = Federal government purchases of goods and services + Transfer payments = $455 million + $85 million = $540 million 
Total revenues = Tax revenue + Interest payment on existing debt + Seigniorage = $405 million + $60 million + $10 million = $475 million 
Budget deficit = Total expenditures - Total revenues = $540 million - $475 million = $65 million 
However, the question asks for the deficit including newly-issued government bonds, which is an additional $185 million. 
Budget deficit including newly-issued government bonds = Budget deficit + Newly-issued government bonds = $65 million + $185 million = $250 million 
Therefore, the correct answer is B) $195 million.

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Table 151 The Data in the Table Represents Budget Figures for the \\
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