An economy has a debt of $20 billion at the beginning of the year. Government spending is $10 billion, and the budget surplus is $5 billion. At the end of the year, the debt is $15 billion.

Question

Quizplus · Accepted Answer

The budget surplus of $5 billion means the government is taking in more money than it is spending, which should go towards paying down the debt. Therefore, if the debt started at $20 billion and there was a surplus of $5 billion, the debt at the end of the year should be $15 billion.

An Economy Has a Debt of $20 Billion at the Beginning