Question : What is a balanced budget?
Option 1: When government spending is equal to government revenue
Option 2: When government spending is greater than government revenue
Option 3: When government spending is less than government revenue
Option 4: When government spending is zero
Correct Answer: When government spending is equal to government revenue
Solution : The correct answer is (a). When government spending is equal to government revenue.
A balanced budget occurs when a government's total spending matches its total revenue in a given period, typically a fiscal year. This means that the government is not running a deficit (spending more than it receives) nor a surplus (receiving more than it spends). In a balanced budget scenario, government expenditures are fully covered by the revenue generated through taxes, fees, and other sources of income.
The goal of a balanced budget is to achieve fiscal stability and ensure that the government's expenses are sustainable and within its means. It reflects a state where the government's overall financial position is in equilibrium, with no net deficit or surplus.
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