Question : What is a budget deficit?
Option 1: When the government spends more than it takes in
Option 2: When the government takes in more than it spends
Option 3: When the government has no debt
Option 4: When the government has a surplus
Correct Answer: When the government spends more than it takes in
Solution : The correct answer is (a) When the government spends more than it takes in.
A budget deficit occurs when the government's total expenditures exceed its total revenue or income in a given period, typically a fiscal year. In other words, it is a situation where the government spends more money than it receives from sources such as taxes, fees, and other forms of revenue.
To cover the deficit, the government may resort to borrowing money, issuing bonds, or using other financing methods. This leads to an increase in the national debt, as the government accumulates liabilities to bridge the gap between its expenditures and revenue.
It's important to note that having a budget deficit or surplus is a common occurrence for governments, and it is often influenced by various economic factors and policy decisions.
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