Sia
Question
Statistics
Posted 6 months ago
Which of the following changes would cause a balanced budget to move to a budget surplus?
Choose 1 answer:
(A) A decrease in national income
(B) An increase in transfer payments
(C) A decrease in tax revenue
(D) An increase in government spending
(E) A decrease in transfer payments
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Answer from Sia
Posted 6 months ago
Solution by Steps
step 1
Identify the impact of each option on a balanced budget: A balanced budget occurs when government spending equals tax revenue. To move to a budget surplus, government spending must decrease, or tax revenue must increase
step 2
Analyze the options: Option A (A decrease in national income) would likely decrease tax revenue, not create a surplus. Option B (An increase in transfer payments) would increase government spending. Option C (A decrease in tax revenue) would move the budget towards a deficit. Option D (An increase in government spending) also moves towards a deficit. Option E (A decrease in transfer payments) would decrease government spending, which could create a surplus if tax revenue remains constant
∻Answer∻
The correct answer is the one that would lead to a decrease in government spending without reducing tax revenue, thus creating a surplus
E
Key Concept
Budget Surplus
Explanation
A budget surplus occurs when government spending is less than tax revenue; decreasing transfer payments reduces government spending without affecting tax revenue.
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