Consider the Federal Government's Budget Constraint

question 89

Multiple Choice

Consider the federal government's budget constraint.If the government's total 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:

Net Operating Income

This is the profit a company makes from its operations, after all operating expenses have been subtracted from revenues but before taxes and interest are deducted.

Contribution Margin

The amount remaining from sales revenue after variable expenses have been deducted, indicating how much revenue is contributing to fixed expenses and net income.

Variable Costing

An accounting method that only considers variable costs (costs that vary with the level of output) when calculating the cost of goods sold and production.

Absorption Costing

An accounting method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a unit of product.