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?

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Definitions:

Residual Value

The estimated value of a leased asset at the end of the lease term, or the expected value of an asset after its useful life ends.

Depreciation Rate

The percentage or method used to calculate the decrease in value of an asset over time due to use, wear and tear, or obsolescence.

FIFO Approach

A method of inventory valuation where the first items put into inventory are the first ones to be recorded as sold.

Sum-Of-The-Years'-Digits Method

A depreciation technique that results in a more accelerated write-off of an asset over its useful life, by applying a decreasing fraction to its depreciable cost.