Governments run a balanced budget when
A) their debt is interest-free.
B) transfer payments equal zero.
C) revenues exceed spending.
D) revenues equal spending.

Question

Quizplus · Accepted Answer

When a government runs a balanced budget, its revenues and spending are equal. This means that it is neither running a surplus (revenues exceed spending) nor a deficit (spending exceeds revenues). A balanced budget does not necessarily mean that the government has no debt, and it does not necessarily mean that transfer payments (such as social welfare programs) equal zero. Therefore, choices A and B are incorrect, and choice C describes a surplus budget rather than a balanced budget.

Governments Run a Balanced Budget When