For a national government, assume that the total revenue for 2013 was $3.3 trill

Question

For a national government, assume that the total revenue for 2013 was $3.3 trillion and total spending was $3.2 trillion. Suppose that total spending increases by 1.4% over the 2013 level. Would this increase be possible with a 2.7% increase in revenue over the 2013 level? Select the correct choice below and fill in the answer boxes to complete your choice. (Round to the nearest billion as needed.)

A. Yes; revenue increases by ______$ billion, while spending increases by______ $ billion. .

OR

B. No; revenue increases by_____ $ billion, while spending increases by ______$ billion.

Explanation / Answer

Increase in spending = 1.4% over 2013 level = 1.4% of $3.2 trillion = (1.4/100)*3.2 = $ 0.0448 trillion

New spending = 3.2 + 0.0448 = $ 3.2448 trillion

Increase in revenue = 2.7% over 2013 level = 2.7% of $3.3 trillion = (2.7/100)*3.3 = $ 0.0891 trillion

New revenue = 3.3 + 0.0891 = $ 3.3891 trillion

Since, New revenue is greater than New spending, it would be possible.

Answer: A

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