You Have Some Estimates of National Accounts Numbers for a Closed

question 57

Multiple Choice

You have some estimates of national accounts numbers for a closed economy for the coming year.Under one set of expectations,government purchases will be $30 billion,transfer payments will be $10 billion,and taxes will be $45 billion.Under another set of expectations,GDP will be $200 billion,taxes will be $50 billion,transfer payments will be $20 billion,consumption will be $120 million,and investment will be $40 billion.Based on these numbers in the first case there should be a

• A)$15 billion surplus,and in the second case a $10 billion surplus.
• B)$15 billion surplus,and in the second case a $30 billion deficit.
• C)$5 billion surplus,and in the second case a $10 billion deficit.
• D)$5 billion surplus,and in the second case a $30 billion deficit.

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Definitions:

Initial Endowment

The initial allocation of resources or goods that an individual or firm has before any trade takes place in an economic model.

Initial Endowment

The initial quantity of goods, services, or resources an individual, firm, or economy possesses.

Pareto Efficient

A state of allocation where it is impossible to make any one individual better off without making at least one individual worse off.

Utility Function

A mathematical representation that ranks the preferences of an individual consumer for different bundles of goods.