How does a government budget deficit occur?
A) A government's tax revenues exceed its spending.
B) A government's spending exceeds its tax revenues.
C) If a nation carries a public debt, it must be running a deficit every year.
D) A nation earns more on exports than it spends on imports.

Question

Quizplus · Accepted Answer

A government budget deficit occurs when the government's spending exceeds its tax revenues. This can happen due to various reasons, such as an economic recession requiring increased government spending on social welfare programs or national defense, or if the government reduces tax rates without cutting spending. A budget deficit leads to the accumulation of public debt.

How Does a Government Budget Deficit Occur