What budget condition occurs when government revenue is less than expenditure?

What budget condition occurs when government revenue is less than expenditure?

• A. Injections
• B. GDP
• C. Economic Growth
• D. Deficit budget

Answer: (D)

When the government spends more money than it takes in as revenue, it runs a deficit. This gap is usually covered by borrowing, which adds to the national debt. A deficit budget is simply that situation: expenditures exceed revenue in the budget period. If revenue were larger than spending, it would be a surplus, and if they were equal, it would be a balanced budget. The other terms in the options refer to different ideas—such as overall spending in the economy (injections), total output (GDP), or growth over time (economic growth)—and don’t describe the budget outcome in which spending outstrips revenue.

When the government spends more money than it takes in as revenue, it runs a deficit. This gap is usually covered by borrowing, which adds to the national debt. A deficit budget is simply that situation: expenditures exceed revenue in the budget period. If revenue were larger than spending, it would be a surplus, and if they were equal, it would be a balanced budget. The other terms in the options refer to different ideas—such as overall spending in the economy (injections), total output (GDP), or growth over time (economic growth)—and don’t describe the budget outcome in which spending outstrips revenue.