Economics • Economic BasicsEasy
What does a budget deficit signify in a national economy?
A. Total government revenue exceeds total government expenditure
B. Total government expenditure exceeds total government revenue✓ Correct Answer
C. Exports are greater than imports over a fiscal year
D. The central bank has decreased the money supply
💡 Solution & Explanation
A budget deficit occurs when total government expenditure surpasses total revenue during a specific fiscal year, requiring the government to borrow funds through issuing securities. Surpluses represent situations where revenues exceed expenditures, whereas trade deficits pertain to international transactions rather than domestic fiscal budgets. Fiscal policy management often involves controlling this deficit to maintain macroeconomic stability.
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