Consider the Federal Government's Budget Constraint

question 29

Multiple Choice

Consider the federal government's budget constraint.If the government's overall budget deficit is $27 billion and its debt-service payments are $29 billion,then its

• A)primary budget deficit is $2 billion.
• B)primary budget deficit is $56 billion.
• C)primary budget surplus is $2 billion.
• D)primary budget surplus is $56 billion.
• E)Not enough information to determine.

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Definitions:

Cash Balance

The amount of cash held in a company's bank account and on hand at any given time.

Dividends Declared

Profits distributed by a company to its shareholders out of its earnings, based on the number of shares owned.

Retained Earnings

Profits that a company has earned to date, less any dividends or other distributions paid to shareholders, often reinvested in the business or kept as a reserve.