Question : What is the difference between a deficit budget and a surplus budget?
Option 1: A deficit budget spends more than it earns, while a surplus budget earns more than it spends
Option 2: A deficit budget earns more than it spends, while a surplus budget spends more than it earns
Option 3: A deficit budget earns as much as it spends, while a surplus budget earns more than it spends
Option 4: A deficit budget spends as much as it earns, while a surplus budget spends more than it earns
Correct Answer: A deficit budget spends more than it earns, while a surplus budget earns more than it spends
Solution : The correct option is (a) A deficit budget spends more than it earns, while a surplus budget earns more than it spends.
A deficit budget refers to a situation where a government's expenditures exceed its revenues or income. In other words, the government spends more money than it earns through various sources such as taxes, fees, and other sources of revenue. This creates a deficit or shortfall, which is typically financed through borrowing or other means.
On the other hand, a surplus budget occurs when a government's revenues or income exceed its expenditures. In this case, the government earns more money than it spends, resulting in a surplus. This surplus can be used to pay off debts, invest in infrastructure, save for future expenses, or reduce taxes.
So, the main difference between a deficit budget and a surplus budget is the relationship between government expenditures and revenues: a deficit budget spends more than it earns, while a surplus budget earns more than it spends.
