No Bull Economics Lessons

Macroeconomics & Microeconomics Concepts You Must Know

AD/AS and Fiscal Policy (5 of 10)

Question 5:
When there is a federal budget surplus:

I. the Federal Reserve increased the money supply in a given year.
II. the Federal Reserve decreased the money supply in a given year.
III. the government spent more in a year than it received in taxes.
IV. the government collected more taxes in a year than it spent.

A.  I
B.  II
C.  III
D.  IV
E.  None of the above

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Correct Answer: D, IV. When the government collects more in taxes than it spends, the federal budget shows a surplus.