-When the government's expenses exceed its revenues, the government debt
A) shrinks thanks to the budget deficit.
B) grows to finance the budget surplus.
C) grows to finance the budget deficit.
D) shrinks thanks to the budget surplus.
E) does not change because it has nothing to do with government outlays and tax revenue.

Question

-When the government's expenses exceed its revenues, the government debt
A) shrinks thanks to the budget deficit. 
B) grows to finance the budget surplus. 
C) grows to finance the budget deficit. 
D) shrinks thanks to the budget surplus. 
E) does not change because it has nothing to do with government outlays and tax revenue.

Quizplus · Accepted Answer

When the government's expenses exceed its revenues, it results in a budget deficit. To finance this deficit, the government often borrows money, which increases the government debt.

-When the Government's Expenses Exceed Its Revenues, the Government Debt