You were asked to solve the following problem:
Assume that Country A's GDP this year is $500 billion. The government has collected $90 billion in tax revenue. Total government spending is 25% of GDP. Determine whether there is a budget deficit or a budget surplus and calculate its amount.
Compare total government spending and tax revenue to determine if there is a budget surplus or deficit. Select the best answer.
Since total government spending exceeds tax revenue, there is a budget deficit.
Since tax revenue exceeds total government spending, there is a budget deficit.
Since total government spending exceeds tax revenue, there is a budget surplus.
Since tax revenue exceeds total government spending, there is a budget surplus.