PUBLIC FINANCE IN-CLASS WORKSHEET 1 This question examines the federal budget. You will use a balance...
PUBLIC FINANCE
IN-CLASS WORKSHEET 1
This question examines the federal budget. You will use a balance sheet to identify whether the federal government is running a budget surplus or deficit.
Below, you are provided with an incomplete federal budget. It is incomplete because you are not given a value for federal expenditures on national defense.
FEDERAL BUDGET
Revenues Expenditures
Individual Income Taxes: $23M Health: $35M
Social Insurance & Pensions &
Retirement Receipts: $15M Income Security: $12M
Corporate Income Taxes: $12M National Defense: _____
Excise Taxes: $3M Interest on Debt: $2M
Task 1: What is the total amount of federal government revenues in the federal budget presented above?
23 + 15 + 12 + 3 = $53M
Task 2: Suppose that national defense spending is equal to $2M. Is the federal budget in surplus or in deficit? By how much?
EXPENDITURES = 35 + 12 + 2 + 2 = $51M. THE FEDERAL BUDGET IS IN SURPLUS, BECAUSE EXPENDITURES ARE LESS THAN REVENUES.
Task 3: Suppose that national defense spending is equal to $7M. Is the federal budget in surplus or in deficit? By how much?
EXPENDITURES = 35 + 12 + 7 + 2 = $56M. THE FEDERAL BUDGET IS IN DEFICIT, BECAUSE EXPENDITURES ARE GREATER THAN REVENUES.
Task 4: Fill in the blanks in the following statement:
As long as federal expenditures on national defense are less
than ________, the Federal Budget will be in ________________.
Homework Answers
As long as federal expenditures on national defense are less than ____$4M____, the Federal Budget will be in _______Surplus_________.
Federal Government Revenue= individual Income Taxes + Social Insurance and Retirement Receipt + Corporate Income Taxes + Excise duties
= 23 + 15 + 12 + 3 = $53M
Federal Government Expenditures= Health & Pension + Income Security + Interest on debt + National Defence
= 35+12+2+ x= 49+ National Defence
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