Sia
Question
Microeconomics
Posted 8 months ago
Which of the following changes would cause a balanced budget to move to a budget surplus?
Choose 1 answer:
A An increase in government spending
(B) A decrease in national income
(c) A decrease in tax revenue
D) An increase in transfer payments
(E) A decrease in transfer payments
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Answer from Sia
Posted 8 months ago
Solution
a
Definition of Budget Surplus: A budget surplus occurs when government revenues exceed government expenditures
b
Decrease in Transfer Payments: A decrease in transfer payments reduces government expenditures, potentially leading to a budget surplus if revenues remain constant or increase
Answer
E: A decrease in transfer payments
Key Concept
Budget Surplus
Explanation
A budget surplus is achieved when government revenues are greater than its expenditures. Reducing transfer payments decreases government spending, which can help move from a balanced budget to a budget surplus.
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