If government spending exceeds tax collections,
A) there is a budget deficit.
B) public debt will fall
C) there is a budget surplus.
D) private saving is positive.
E) public saving is positive.

Question

Quizplus · Accepted Answer

When government spending exceeds tax collections, it means that the government is not collecting enough revenue to cover its expenses. This results in a budget deficit, where the government has to borrow money to make up for the shortfall. As a result, public debt will increase, not fall. Private saving may or may not be positive, but public saving will be negative in this situation.

If Government Spending Exceeds Tax Collections