In Every Year Between 1998 and 2008,the Canadian Federal Government

question 13

Multiple Choice

In every year between 1998 and 2008,the Canadian federal government had a

• A)budget deficit,indicating that even deep cuts in government spending were not sufficient to alleviate the problem.
• B)primary deficit,indicating that tax revenues were insufficient to cover discretionary government expenditures.
• C)budget deficit,which contributed to a growing stock of government debt.
• D)primary surplus but overall deficit,indicating that tax revenues were more than sufficient to cover discretionary government expenditures.
• E)budget surplus,indicating that tax revenues were more than sufficient to cover total government expenditures.

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Definitions:

Time Value of Money

The concept that money available today is worth more than the same amount in the future due to its earning capacity.

Net Present Value

The variance between the current worth of incoming cash and the current worth of outgoing cash throughout a specific time frame.

Cost of Capital

The rate of return a company must earn on its investment projects to maintain its market value and attract funds.

Profitability Index

A financial tool used to measure the relative profitability of an investment, calculated as the present value of future cash flows divided by the initial investment cost.