Suppose a Country Has Been Running a Persistent Government Budget

question 92

Multiple Choice

Suppose a country has been running a persistent government budget deficit. If the deficit is reduced, but remains positive,

• A) the country will experience a budget surplus.
• B) government debt will decrease.
• C) government debt will increase.
• D) interest payments on the debt immediately will decrease.

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Definitions:

Payroll Tax Expense

Levies placed on both employers and employees, determined based on a percentage of the wages that employers distribute to their workforce.

FICA Taxes Payable

Taxes owed for Federal Insurance Contributions Act, primarily for Social Security and Medicare, withheld from employees' paychecks.

Employer's Payroll Taxes

These are taxes that employers are required to pay on behalf of their employees, including Social Security and Medicare taxes in the United States.

Pension Rights

The entitlements employees earn towards future pension benefits as a result of their employment.