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Question
If the government has no debt initially, but then has annual revenues of $10 billion per year for 4 years and annual expenditures of $10.5 billion per year for 4 years, then the government has
A) a budget surplus of $0.5 billion per year and a debt of $2 billion at the end of the 4 years.
B) a budget deficit of $0.5 billion per year and a budget surplus of $2 billion at the end of the 4 years.
C) a budget deficit of $0.5 billion per year and a debt of $2 billion at the end of the 4 years.
D) a budget surplus of $0.5 billion per year and a surplus of $2 billion at the end of the 4 years.
Answer
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