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Part A. What are the three possible outcomes when the us federal government adds up its...

Part A. What are the three possible outcomes when the us federal government adds up its total revenue for a fiscal year and subtracts its expenditures from the same fiscal year?

Part B. What actions, if any does the federal government do after each of the above possible outcomes?

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Answer #1

A - The three possible outcomes are -

1 - Budget surplus if the revenue is greater than expense

2 - Balanced budget if the revenue equals the expenditure

3 - Budget deficit if the revenue is less than the expenditure.

B - In case of the surplus , the government will increase its spending in economy for the growth as it is already in surplus

In case of deficit , it will increase the taxes , decrease the spending and may create the national debt to finance the deficit.

No action is needed in the case of balance budget.

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