What does a government deficit indicate?

What does a government deficit indicate?

• A. Revenue exceeds expenditures
• B. Expenditures exceed revenue
• C. The economy is in a trade deficit
• D. The government runs a balanced budget

Answer: (B)

A government deficit occurs when expenditures exceed revenue. This means the government is spending more money than it brings in from taxes and other income, so it borrows to cover the shortfall, which adds to the national debt. In contrast, a surplus would mean revenue exceeds expenditures, a trade deficit relates to imports versus exports in the economy, and a balanced budget means revenues equal expenditures. So the statement that best describes a deficit is that expenditures exceed revenue.

A government deficit occurs when expenditures exceed revenue. This means the government is spending more money than it brings in from taxes and other income, so it borrows to cover the shortfall, which adds to the national debt. In contrast, a surplus would mean revenue exceeds expenditures, a trade deficit relates to imports versus exports in the economy, and a balanced budget means revenues equal expenditures. So the statement that best describes a deficit is that expenditures exceed revenue.