Correct Answer: A balanced budget spends as much as it earns, while a deficit budget spends more than it earns

Solution : The correct answer is (a) A balanced budget spends as much as it earns, while a deficit budget spends more than it earns.

A balanced budget refers to a situation where a government's expenditures equal its revenues or income. In other words, the government spends only what it earns through various sources such as taxes, fees, and other revenue streams. This results in a balance between income and expenditure.

On the other hand, a deficit budget occurs when a government's expenditures exceed its revenues. In this case, the government spends more money than it earns, leading to a deficit or shortfall. The deficit is typically financed through borrowing, such as issuing government bonds or taking loans.

So, the main difference between a balanced budget and a deficit budget is that a balanced budget spends as much as it earns, while a deficit budget spends more than it earns.