Below is some data for a hypothetical economy:

-Refer to the information above to answer this question.What is the value of the government's budget at equilibrium income?
A)In deficit by $40
B)In surplus by $40
C)In deficit by $190
D)In deficit by $20
E)In surplus by $20

Question

Below is some data for a hypothetical economy:
 
-Refer to the information above to answer this question.What is the value of the government's budget at equilibrium income?
A)In deficit by $40 
B)In surplus by $40 
C)In deficit by $190 
D)In deficit by $20 
E)In surplus by $20

Quizplus · Accepted Answer

At equilibrium income, the government's budget is balanced when taxes ($200) are equal to government spending ($200). However, if taxes exceed government spending, there is a surplus, and if government spending exceeds taxes, there is a deficit. From the given data, we see that at equilibrium income the government spending is $180 and taxes are $220, which means there is a surplus of $40. Therefore, the correct answer is E, in surplus by $20.

Below Is Some Data for a Hypothetical Economy