Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
When government spending exceeds its revenue
B
When government revenue exceeds its spending
C
A situation where the budget is balanced
D
A type of tax
Understanding the Answer
Let's break down why this is correct
Answer
A budget deficit happens when a government spends more money than it earns in a certain period, usually a year. To understand this, think of it like a person who has a job that pays them $3,000 each month but spends $3,500. This person has a deficit of $500 because they have spent more than they have brought in. Similarly, when a government has a budget deficit, it may need to borrow money to cover the extra expenses, which can lead to increased debt. Managing a budget deficit is important because it affects the country's financial health and can influence future spending and taxes.
Detailed Explanation
A budget deficit happens when a government spends more money than it earns. Other options are incorrect because This option suggests that the government makes more money than it spends; A balanced budget means spending equals income.
Key Concepts
budget deficit definition
Topic
Calculating Budget Deficits
Difficulty
easy level question
Cognitive Level
understand
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