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tsk tsk
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Surpluses, Deficits and Calculation the Budget Balance

Suppose the federal budget deficit for the year was $120 billion and the economy was in a recession. If the economy had been at potential GDP, it is estimated that tax revenues would have been $70 billion higher and government spending on transfer payments would have been $90 billion lower. Based on these estimates, the cyclically adjusted budget ________.

▸ deficit was $140 billion

▸ surplus was $40 billion

▸ surplus was $160 billion

▸ deficit was $20 billion
Textbook 

Macroeconomics


Edition: 3rd
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jaymasterjaymaster
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More solutions for this book are available here
surplus was $40 billion

The solution is calculated as: increase in tax revenues + decrease in transfer payments + (- federal budget deficit).  A positive answer shows a surplus and a negative answer shows a deficit.
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Just got PERFECT on my quiz
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