A budget deficit occurs when expenses exceed revenue, indicating that the government is spending more than it earns.
What is a budget deficit? (2019)
Practice Questions
Q1
What is a budget deficit? (2019)
When expenses exceed revenue
When revenue exceeds expenses
When there is no surplus
When the budget is balanced
Questions & Step-by-Step Solutions
What is a budget deficit? (2019)
Step 1: Understand what a budget is. A budget is a plan that shows how much money is expected to come in (revenue) and how much will be spent (expenses).
Step 2: Know what revenue means. Revenue is the money that the government earns from taxes and other sources.
Step 3: Know what expenses mean. Expenses are the costs that the government has to pay for things like schools, roads, and salaries.
Step 4: Learn what happens when expenses are greater than revenue. If the government spends more money than it earns, it has a budget deficit.
Step 5: Realize the implications of a budget deficit. A budget deficit means the government needs to borrow money to cover the extra expenses.
Budget Deficit – A situation where government expenses surpass its revenues.
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