If the Federal Budget Goes from a Budget Deficit in Year

question 120

Essay

If the federal budget goes from a budget deficit in Year 1 to a budget surplus in Year 2,does it follow that the federal government acted to raise taxes or cut government spending in Year 2?

---

Definitions:

Earned Surplus Test

A financial measure used to determine the amount of income that a company has earned and is available for dividends distribution after accounting for all necessary expenses.

Surplus Test

A financial measure used to determine if an entity has excess assets over liabilities, often in insurance contexts.

Net Asset Test

A financial metric used to evaluate a company's financial health by subtracting total liabilities from total assets.

Liability

The state of being responsible for something, especially in terms of legal or financial obligations.