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Which of the following is a key component of a government budget?

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Question: Which of the following is a key component of a government budget?

Options:

  1. Monetary policy
  2. Fiscal deficit
  3. Interest rates
  4. Inflation targeting

Correct Answer: Fiscal deficit

Solution: 

Fiscal deficit is a key component of a government budget as it indicates the difference between the government\'s total revenue and total expenditure.

Which of the following is a key component of a government budget?

Practice Questions

Q1
Which of the following is a key component of a government budget?
  1. Monetary policy
  2. Fiscal deficit
  3. Interest rates
  4. Inflation targeting

Questions & Step-by-Step Solutions

Which of the following is a key component of a government budget?
  • Step 1: Understand what a government budget is. A government budget is a plan that outlines how much money the government expects to earn (revenue) and how much it plans to spend (expenditure).
  • Step 2: Learn about fiscal deficit. Fiscal deficit occurs when the government's total spending exceeds its total revenue.
  • Step 3: Recognize why fiscal deficit is important. It shows how much more money the government is spending compared to what it is earning.
  • Step 4: Conclude that fiscal deficit is a key component of a government budget because it helps to understand the financial health of the government.
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