A budget deficit occurs if government spending:

Question

Quizplus · Accepted Answer

A budget deficit occurs when government spending exceeds tax revenues. This means that the government is spending more than what it is collecting in taxes, which can lead to an increase in public debt. Option A is incorrect because if spending equals tax revenues, then the government would have a balanced budget. Option C is incorrect because if spending is less than tax revenues, then the government would have a budget surplus. Option D is incorrect because tax revenues may increase as a result of various factors, but this does not necessarily mean that there would be a budget deficit.

A Budget Deficit Occurs If Government Spending