Question

4. Assuming the government of country Balistan has a balanced budget requirement and collects $100 million more in taxes than expected in 2016. As a result, the government would have to

increase taxes by $100 million.

increase spending by $100 million.

reduce spending by $100 million.

5.

Assuming that income tax is the only source of revenue for the government, with tax revenue of $50 billion and government spending totaling $70 billion, which of the following is true of the government’s budget?

The government has a budget surplus of $20 billion.

The government has a balanced budget of $70 billion.

The government has a budget deficit of $20 billion.

10.

Banks create money through which of the following processes?

printing money

lending money

writing checks on bank deposits

11.

Corporate stock ________.

represents debt in a firm.

is considered to be a loan from a bank.

represents ownership in a firm.

14.

If a person owns stock in a corporation, what do they own?

Corporate stock represents ownership in a firm.

Corporate stock is considered to be a bank bond.

Corporate stock represents firm debt.

16.

Debit cards are a form of

debt.

money.

credit.

Answer 1

Answer : 4) The answer is option B.

Here balance budget increases by $100 million than expectation. This means that the government gets budget surplus of addition $100 million. Due to additional budget surplus of $100 million the government will increase the spending by $100 million. Therefore, option B is correct.

5) The answer is option C.

Government spending depends on government revenue. Here the government spending is higher than the government revenue by (70 - 50) = $20 billion. This means that the government faces a situation of budget deficit of $20 billion. Therefore, option C is correct.

10) The answer is option B.

Bank accept deposits from depositors. Then bank provide loan this deposit amount after keeping reserves in hand. Borrowers have to pay interest on repayment of loan. Bank take this interest amount and a small part of this interest amount give on depositor's deposit amount as saving interest. Thus, bank create money. Therefore, option B is correct.

11) The answer is option C.

If a firm has ownership in corporation then this is known as firm's corporate stock. Therefore, option C is correct.

14) The answer is option A.
When a person has ownership in corporation then this means that the person is the owner of corporate stock. Therefore, option A is correct.

16) The answer is option B.

Debit card is that card by which we can pay for any purchase at real time. No interest is charged on debit card payment. We can not borrow money by using debit cards. As debit card work like money to us hence it is a form of money. Therefore, option B is correct.