You have two sets of estimates of national account numbers for a closed economy for next year.In the first set,government expenditures will be $30 billion,transfer payments will be $10 billion,and taxes will be $45 billion.Under the second set,GDP will be $200 billion,taxes will be $50 billion,transfer payments will be $20 billion,consumption will be $120 billion,and investment will be $40 billion.Based on these numbers,what are the respective estimated results?
A) $15 billion surplus and a $10 billion surplus
B) $15 billion surplus and a $10 billion deficit
C) $5 billion surplus and a $10 billion surplus
D) $5 billion surplus and a $10 billion deficit

Question

Quizplus · Accepted Answer

To calculate the surplus or deficit, we need to compare government expenditures with government revenue (taxes) and transfer payments.

For the first set of estimates: 
Government revenue = taxes = $45 billion 
Transfer payments = $10 billion 
Government expenditures = $30 billion

So, 
Government revenue + Transfer payments - Government expenditures = $45 billion + $10 billion - $30 billion = $25 billion surplus

For the second set of estimates: 
Government revenue = taxes = $50 billion 
Transfer payments = $20 billion 
Government expenditures = Consumption + Investment = $120 billion + $40 billion = $160 billion

So, 
Government revenue + Transfer payments - Government expenditures = $50 billion + $20 billion - $160 billion = $10 billion deficit

Therefore, the respective estimated results are a $25 billion surplus in the first set and a $10 billion deficit in the second set, which means the answer is D ($5 billion surplus and a $10 billion deficit).

You Have Two Sets of Estimates of National Account Numbers