Suppose a government has access to the following sources of funding currently as well as over the long run:

Source Dollar Amount

Taxes $1,000

User charges $100

Borrowed funds $250

1. In the current time period, this government's spending on goods and services and transfer payments is limited to

A. $1,250.

B. $1,100.

C. $1,000.

D. $1,350.

2. Over the long run, this government's fundamental revenues are equal to

A. $1,250.

B. $1,000.

C. $1,350.

D. $1,100.

spending and transfer payments = $1350

so correct option is D. $1,350

fundamental revenue = $1100

so correct option is D. $1,100

Explanation:

given data

Taxes = $1,000

User charges = $100

Borrowed funds = $250

to find out

spending on goods and services and transfer payment and fundamental revenues

solution

we know that here All three taxes, User charges and Borrowed funds are the source of fund

so that we spending and transfer payments are limit that is

spending and transfer payments = Taxes + User charges + Borrowed funds

spending and transfer payments = $1000 + $100 + $250

spending and transfer payments = $1350

so correct option is D. $1,350

and

as borrow funds can not part of fundamental revenue

so that they are to be paid back

so here fundamental revenue will be

fundamental revenue = Taxes + User charges

fundamental revenue = $1000 + $100

fundamental revenue = $1100

so correct option is D. $1,100