Suppose that the government of Smallville spends $2 trillion in 2018 and receives tax revenues of $1.5 trillion in that same year. Which of the following is TRUE?

Question

Quizplus · Accepted Answer

A budget surplus occurs when the government's revenues exceed its spending, while a budget deficit occurs when the government's spending exceeds its revenues. In this case, the government of Smallville spent $2 trillion but only received $1.5 trillion in tax revenues. Therefore, it has a budget deficit of $0.5 trillion. Choices C and D are unrelated to the given information.

Suppose That the Government of Smallville Spends $2 Trillion in 2018