I You are Secretary of the Treasury Steve Mnuchin Its six mo

I. You are Secretary of the Treasury Steve Mnuchin. It\'s six months into the Trump Presidency and you receive some estimates of national accounts numbers you plan to report to the President in a will be $30 billion, transfer payments will be $10 billion, and taxes will be $45 bill Under another set of expectations, GDP will be $200 billion, taxes will be $50 billion. transfer payments will be $20 billion, consumption will be S120 billion, and investment will be $40 billion. cabinet meeting. Under one set of expectations, government expenditures a. Based on these numbers in the first case there should be a surplus or deficit of how much? (2 points) b. Under the second scenario, there should be a surplus or deficit of how much? (2 points)

Solution

ANSWER:

1) Budget surplus or deficit will be = government collect from taxes - transfer payments - government spending

Budget surplus or deficit will be = $45 - $10 - $30 = $5 billion surplus.

2) Budget surplus or deficit will be = government collect from taxes - transfer payments - government spending

government spending = gdp - consumption - investment = $200 - $120 - $40 = $40 billion

Budget surplus or deficit will be = $50 - $20 - $40 = - $10 billion deficit.