The Accompanying Table Gives Budget Information for a Hypothetical Economy

question 119

Multiple Choice

$$\begin{array} { | c | c | c | c | } \hline & \begin{array} { c } \text { Government } \\\text { Spending }\end{array} & \text { Tax Revenues } & \text { GDP } \\\hline \text { Year 1 } & \$ 450 & \$ 425 & \$ 2,000 \\\hline \text { Year 2 } & 500 & 450 & 3,000 \\\hline \text { Year 3 } & 600 & 500 & 4,000 \\\hline \text { Year 4 } & 640 & 620 & 5,000 \\\hline \text { Year 5 } & 680 & 580 & 4,800 \\\hline \text { Year 6 } & 600 & 620 & 5,000 \\\hline\end{array}$$ The accompanying table gives budget information for a hypothetical economy. Assume that all budget surpluses are used to pay down the public debt. The budget de?cit in year 3 is

• A) $175 billion.
• B) $3,050 billion.
• C) $100 billion.
• D) $295 billion.

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Definitions:

Magic Number

Often referencing Miller's law, which suggests the number 7 (plus or minus 2) represents the amount of information a typical human memory can hold in the short term.

Working Memory

A cognitive system responsible for temporarily holding and processing information needed for complex tasks such as learning, reasoning, and comprehension.

Cognitive Processes

Mental processes involved in gaining knowledge and comprehension, including thinking, knowing, remembering, judging, and problem-solving.

Acquisition

The processes of gaining new information and placing it in memory.