Question : A government budget deficit occurs when:
Option 1: Revenues exceed expenditures
Option 2: Expenditures exceed revenues
Option 3: The budget is balanced
Option 4: There are no revenues or expenditures
Correct Answer: Expenditures exceed revenues
Solution : The correct answer is (b) Expenditures exceed revenues.
A budget deficit happens when the government's total expenditures or spending exceed its total revenues or income during a specific period, such as a fiscal year. In other words, the government is spending more money than it is earning from various sources such as taxes, fees, and other revenue streams.
Question : The difference between total government expenditures and total government revenues is known as:
Option 1: The budget deficit
Option 2: The budget surplus
Option 3: The national debt
Option 4: The trade deficit
Question : A government budget that includes provisions for an economic downturn is known as:
Option 1: A countercyclical budget
Option 2: A balanced budget
Option 3: A deficit budget
Option 4: A surplus budget
Question : Which of the following is NOT a key component of a government budget?
Option 1: Expenditures
Option 2: Revenues
Option 3: Deficits
Option 4: Interest rates
Question : When a government borrows money to finance its expenditures, it is known as:
Option 1: Deficit financing
Option 2: Balanced budget financing
Option 3: Surplus financing
Option 4: None of the above
Question : The difference between a government's total revenue and total expenditure is known as:
Option 1: National income
Option 2: Fiscal deficit
Option 3: Trade deficit
Option 4: Budget surplus
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