In which situation does the federal government run a budget deficit?
A) Spending outpaces revenue from taxes.
B) Tax revenue outpaces its expenditures.
C) Monetary policies reduce the amount of money in circulation.
D) Gold reserves are inadequate to support the existing money supply.

Question

Quizplus · Accepted Answer

When the federal government spends more money than it collects in taxes, it runs a deficit. This can occur for various reasons, such as increased spending on programs, military, or stimulus packages, or decreased tax revenue due to a weak economy.

In Which Situation Does the Federal Government Run a Budget