Question

Lilliput is a country that has closed borders and does not import or export any goods or services; hence, they do not worry about trade with other countries.

Total spending for the federal government of Lilliput for the last fiscal year was $1.06 billion. The country collected $1.05 billion in taxes during this same fiscal year. Assume government transfers were zero.

Based on this information, what is Lilliput's budget balance?

Enter your answer to two decimal places.

In the last fiscal year, Lilliput was running

A.a budget surplus

B.a balanced budget

C.a budget deficit

Answer 1

As total revenue from the taxes were $1.05 and the total spending of the government Is 1.06 that is 0.01 more than the tax revenue the government is running a deficit in the market, the answer is "C" a budget deficit.

Budget balance is -0.01 billion.