The Government's Budget Constraint Is Best Represented by Which of the Following

question 8

Multiple Choice

The government's budget constraint is best represented by which of the following equations?

• A) Government purchases of goods and services + Transfer payments + Interest payments on existing debt = Tax revenue + Newly issued government bonds + Seigniorage
• B) Government purchases of goods and services + Transfer payments + Tax revenue = Interest payments on existing debt + Newly issued government bonds + Seigniorage
• C) Tax revenue - Transfer payments = Government purchases of goods and services + Interest payments on existing debt + Newly issued government bonds + Seigniorage
• D) Government purchases of goods and services + Newly issued government bonds + Interest payments on existing debt = Transfer payments + Tax revenue + Seigniorage