Question: If taxes equal government spending, then:
Your Answer: government debt is zero
Correct Answer: tax per person equals government spending per person on average
Mathematically both must be true.
tax revenue = spending
divide both sides by population
tax revenue/population = spending/ population
But the @nd equalization assumes all people pay taxes.
Therefore the first equation is righter.
But that wouldn’t take into account things that come up requiring immediate money that you haven’t budgeted expenses for...
“Mathematically both must be true.”
Not so. You can’t determine anything about the size of the debt from the question or its answer.
Taxes simply have to equal all government spending, including interest on the debt, in order to balance taxes and spending. This has been accomplished exactly twice since the end of WWII IIRC.
Nope. Not mathematically equivalent. Debt is accumulation. All the given statement allows you to say is current account deficit is zero.