When the government's expenditures exceed its tax revenue,the budget
A)has a deficit and the national debt is increasing.
B)is balanced and the national debt is increasing.
C)has a surplus and the national debt is increasing.
D)has a deficit and the national debt is decreasing.
E)None of the above because by law the government's expenditures cannot exceed its tax revenue.

Question

Quizplus · Accepted Answer

When the government's expenditures exceed its tax revenue, the budget has a deficit, which means the government is spending more than it is earning. To finance this deficit, the government may borrow money, which leads to an increase in the national debt. Therefore, option A is the only correct choice.

When the Government's Expenditures Exceed Its Tax Revenue,the Budget