Suppose the Federal Budget Deficit for the Year Was $100

question 176

Multiple Choice

Suppose the federal budget deficit for the year was $100 billion and the economy was in a recession.If the economy had been at potential GDP,it is estimated that tax revenues would have been $60 billion higher and government spending on transfer payments $50 billion lower.Using these estimates,the cyclically adjusted budget

• A)deficit was $210 billion.
• B)deficit was $110 billion.
• C)surplus was $10 billion.
• D)surplus was $110 billion.

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Definitions:

Compounded Monthly

The process where interest is added to the principal sum of a deposit or loan each month, resulting in "interest on interest."

Compounded Annually

Interest calculation method where interest is added to the principal at the end of the year, affecting the total interest earned or paid.

RRSP

Registered Retirement Savings Plan, a Canadian account for holding savings and investment assets, with certain tax benefits.

Compounded Semi-annually

The technique of twice yearly adding interest to the initial sum of money and to the interest that has previously been compounded.