A budget surplus
A) occurs when government expenditures exceed tax revenues.
B) occurs when tax revenues exceed government expenditures.
C) occurs when tax revenues exceed transfer payments.
D) occurs when monetary policy works in the opposite direction of fiscal policy.
E) is an impossibility.

Question

Quizplus · Accepted Answer

A budget surplus occurs when tax revenues exceed government expenditures. It means that the government has collected more money in taxes than it has spent in a given period. This can lead to a reduction in public debt or an increase in government savings. Option A is incorrect as it is the definition of a budget deficit. Option C is incorrect as transfer payments are only a part of government expenditures, and do not solely determine a surplus. Option D is incorrect as it is not a valid definition of a budget surplus. Option E is incorrect as a budget surplus is possible, though uncommon.

A Budget Surplus