Suppose a closed economy generates $2900 output and income in equilibrium. Suppose also that the government spends 400 and imposes a lump-sum tax of 200. By how much is the government in deficit? (round your answer to the nearest whole value)

Survey Of Economics
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ISBN:9781337111522
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter17: Federal Deficits, Surpluses, And The National Debt
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Suppose a closed economy generates $2900 output and income in equilibrium.
Suppose also that the government spends 400 and imposes a lump-sum tax of 200.
By how much is the government in deficit?
(round your answer to the nearest whole value)
Transcribed Image Text:Suppose a closed economy generates $2900 output and income in equilibrium. Suppose also that the government spends 400 and imposes a lump-sum tax of 200. By how much is the government in deficit? (round your answer to the nearest whole value)
Expert Solution
Step 1

Output of the economy = $2900

Government expenditure = $400

Lump-sum tax = $200

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