Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 24, Problem 3.1P
To determine
Accumulated debt and size of budget.
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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$1.06 billion. The country collected $1.05$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.
budget balance: $ ______ billion
In the last fiscal year, Lilliput was running
a. a budget surplus
b. a balanced budget
c. a budget deficit
Please Read the Following Paragraph and Answer the Following Questions
Oman’s government will finance most of its budget shortfall in 2021 by borrowing to plug a fiscal gap battered by a decline in oil prices and the coronavirus pandemic.
The Persian Gulf state is looking into borrowing that will cover 73%, or 1.6 billion rials ($4.2 billion), of the country’s 2.2 billion-rial shortfall, with the remaining 600 million rials to be drawn from its reserves, according to a post on Twitter by the state-run Oman News Agency on Friday. The government based its 2021 budget plan on an oil price of $45 per barrel.
Other highlights from Oman’s 2021 budget:
• Expenditure is set to fall to 10.8 billion rials, a 14% drop from the previous year.
• 2021 revenue is set to fall to 8.6 billion rials, a 19% decline.
• Budget deficit at 8% of gross domestic product in 2021, 2.2 billion rials.
Oman has taken measures such as reduced spending and plans to impose a 5% value-added tax in 2021. It…
If the primary deficit of a government is given as $800 billion ,find the interest on payment when the fiscal deficit is $900 billion.
Chapter 24 Solutions
Principles of Economics (12th Edition)
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- Nigeria typically runs a gov budget surplus, and it has a small debt to GDP ratio (approximately 40%). This year, Nigeria is running a government budget deficit, and it is financing that deficit by selling government bonds.This year's government budget deficit is causing interest rates to (increase/decrease/remain the same/change ambiguously) and the debt to ( increase/decrease/remain the same/change ambiguously.) Nigeria is predicted to return to a surplus position next year. If it is successful, interest rates will (increase/decrease/remain the same/change ambiguously) and the debt will (increase/decrease/remain the same/change ambiguously.) In August 2019, Nigeria announced that it would increase its sale of government bonds from 55 billion nigerian currency to 85 billion nigerian currency. This resulted in (an increase, decrease, no change, an ambiguous change) in the price of government bonds and (an increase, decrease, no change, an ambiguous change) in the yield of government…arrow_forwardA country has a rate of growth (g) of 0.75 %, a debt-to-income of 94% and a primary deficit of 0.9% of output. In response to a stimulus package, the debt-to- income ratio rises to 104% which causes an increase in the interest rate from 2.9% to 7.9%The impact to the change in the debt ratio over time is % (Enter your response rounded to two decimal places.)|arrow_forwardThe imaginary country of Acordia lists the following projected revenues and outlays for 2020: $30 million in personal income tax, $20 million in corporate income tax, $7 million in indirect taxes, $2 million in investment income, $35 million in transfer payments, $14 million in government expenditures, and $4 million in debt interest. What is the projected budget surplus (or deficit) for 2021? Calculate the amount and indicate whether it is a surplus or deficit.arrow_forward
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- The following budget data are for a country having both a central government and provincial governments: Central purchases of goods and services 200 Provincial purchases of goods and services 150 Central transfer payments 100 Provincial transfer payments 50 Grants in aid (central to provincial) 100 Central tax receipts 450 Provincial tax receipts 100 Interest received from private sector by central government 10 Interest received from private sector by provincial governments 10 Total central government debt 1000 Total provincial government debt 0 Central government debt held by provincial governments 200 Nominal interest rate 10% Calculate the overall and primary deficits for the central government, the provincial governments, and the combined governmentsarrow_forwardCalculate the value of interest payment when the primary deficit is given as $9932billion and the fiscal deficit is given as $11888 billionarrow_forwardIf a country's fiscal revenue is 1,908,408.87, and its fiscal expenditure is 2,813,922.47, find the fiscal-balance-to-GDP ratio (expressed as %), given the GDP is 15,434,151.80.arrow_forward
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