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21 August, 20:32

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.

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Answers (1)
  1. 21 August, 20:47
    0
    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
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