Refer to the Diagram, Where T Is Tax Revenues and G

question 34

Multiple Choice

Refer to the diagram, where T is tax revenues and G is government expenditures. All figures are in billions of dollars. If the full-employment GDP is $400 billion, while the actual GDP is $200 billion, the
Actual budget deficit is

• A) $200 billion.
• B) $20 billion.
• C) $40 billion.
• D) $60 billion.

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Definitions:

Notes Receivable

Financial assets representing the right to receive payments from a debtor pursuant to a written promise or agreement.

Direct Write-off Method

An accounting method where uncollectible accounts receivable are directly written off against income at the time they are deemed unrecoverable.

Balance Sheet

A list of the assets, liabilities, and owner’s equity as of a specific date, usually at the close of the last day of a month or a year.

Cash Realizable Value

The net amount of cash expected to be received from accounts receivable and other assets, taking into account any allowances for doubtful accounts.