Correct Answer: To pay down the national debt

Solution : The correct answer is (a) To pay down the national debt.

A budget surplus occurs when the government's revenues exceed its expenditures, resulting in an excess of funds. One of the primary purposes of a budget surplus is to use the extra funds to pay down the national debt. By reducing the debt, the government can decrease the amount of money it owes to lenders and potentially save on interest payments.

Paying down the national debt has several potential benefits. It can help improve the overall financial health of the government by reducing interest payments and freeing up funds for other priorities. It can also enhance investor confidence and contribute to long-term fiscal stability.