Suppose Country a Had Net Taxes of $30 Million and Government

question 169

Multiple Choice

Suppose Country A had net taxes of $30 million and government expenditures of $35 million. In addition,household saving in Country A totalled $5 million while consumption was $80 million. The government of Country A is running a budget ________ and national saving is ________ million.

• A) surplus; $5
• B) deficit; -$5
• C) deficit; $0
• D) surplus; $25

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Definitions:

Internal Rate of Return (IRR)

A financial metric used to estimate the profitability of potential investments.

Cost of Capital

The rate of return a company must earn on its investment projects to maintain its market value and attract funds.

Discount Rate

The interest rate used in discounted cash flow analysis to determine the present value of future cash flows.

Net Present Value (NPV)

The variance between the current value of incoming cash and the current value of outgoing cash throughout a specific duration.