A federal budget deﬁcit exists when
A) federal government assets are less than liabilities in a given year.
B) federal government spending exceeds tax revenues in a given year.
C) federal government spending is increasing in a given year.
D) federal government taxation is decreasing in a given year.

Question

Quizplus · Accepted Answer

A federal budget deficit occurs when the federal government spends more money than it collects in tax revenues in a given year. This means that the government has to borrow money to cover its expenses, which leads to an increase in the federal debt. Option A is incorrect because the comparison between assets and liabilities does not determine if there is a budget deficit. Options C and D are also incorrect because they focus on the direction of spending and taxation, rather than the relationship between spending and tax revenues.

A Federal Budget Deﬁcit Exists When