The Following Is Budget Information for a Hypothetical Economy

question 25

Multiple Choice

The following is budget information for a hypothetical economy. All data are in billions of dollars. Refer to the above table. In which year is there a budget surplus?

• A) Year 1
• B) Year 2
• C) Year 4
• D) Year 5

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Definitions:

Natural Rate

Often refers to the natural rate of unemployment, indicating the lowest unemployment rate an economy can sustain over the long term without causing inflation.

Unemployment

The situation where individuals who are able and willing to work do not find jobs, expressed as a percentage of the labor force.

Real GDP

The measure of a country's economic output adjusted for price changes (inflation or deflation), reflecting the real quantity of goods and services produced.

Military Spending

Financial allocation by a government for the maintenance and operation of armed forces, including expenses related to salaries, equipment, training, and facilities.