In the island economy of Lyrana, the finance ministry monitored taxes received and public spending while planning its 2023 budget. Table 1 gives selected fi...
Question 1 Report
In the island economy of Lyrana, the finance ministry monitored taxes received and public spending while planning its 2023 budget. Table 1 gives selected figures. The government aims to reduce any deficit without damaging economic growth.
| Year | Tax revenue ($ billion) | Government spending ($ billion) |
|---|---|---|
| 2020 | 46 | 51 |
| 2021 | 49 | 53 |
| 2022 | 55 | 52 |
(a) State the year in which Lyrana had a budget surplus. [1]
(b) Calculate the size of Lyrana's budget deficit in 2021. [2]
Answer Details
(a) Lyrana had a budget surplus in 2022. [1] Tax revenue was $55 billion and government spending was $52 billion, so revenue exceeded spending.
(b) A deficit is calculated as government spending minus tax revenue:
\[\$53\text{ billion}-\$49\text{ billion}=\$4\text{ billion}\]
Lyrana's 2021 budget deficit was $4 billion. [2]
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