In Examining the National Income Accounts of the Closed Economy

question 29

Multiple Choice

In examining the national income accounts of the closed economy of Nepotocracy you see that this year it had taxes of $100 billion, transfers of $40 billion, and government purchases of goods and services of $80 billion. You also notice that last year it had private saving of $50 billion and investment of $70 billion. In which year did Nepotocracy have a budget deficit of $20 billion?

• A)this year and last year
• B)this year but not last year
• C)last year but not this year
• D)neither this year nor last year

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Definitions:

Withdrawing Partner

An individual partner who exits a partnership, thereby receiving their share of the partnership's assets after settling any liabilities.

Accounts Receivable

Money owed to a business by its clients or customers for goods or services delivered but not yet paid for, recorded as an asset on the balance sheet.

Allowance for Doubtful Accounts

A contra-asset account used to estimate the amount of receivables that may not be collectible.

Sole Proprietorship

A business owned and operated by a single individual, with no legal distinction between the owner and the business entity.