Neco 2017 Economics Question 29

Practice objective / multiple choice question 29 from the 2017 Neco Economics examination.

Neco 2017 Economics Objective / Multiple Choice Medium Difficulty
Question 29 NECO • 2017 • ECONOMICS • objective

The government's tax revenue equals 25 % of GDP and its total spending equals 30 % of GDP, of which 40 % is public investment. To achieve a primary budget surplus of 2 % of GDP while keeping spending unchanged, the tax rate must be raised. What should be the new tax rate as a proportion of GDP, and what is the amount of the primary surplus (as a proportion of GDP)?

Answer Options

A. 34 % of GDP; primary surplus = 4 % of GDP
Correct Answer B. 32 % of GDP; primary surplus = 2 % of GDP
C. 30 % of GDP; primary surplus = 0 % of GDP
D. 31 % of GDP; primary surplus = 1 % of GDP
Correct Answer
B
Correct Option:
32 % of GDP; primary surplus = 2 % of GDP

About This Question

This is Neco 2017 Economics Question 29. It is one of the objective questions from the 2017 Neco Economics examination.

Difficulty level: Medium .

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