PRC-3 · Chapter 16 · Question 4 of 20
When the government's total planned expenditures for the upcoming financial year significantly exceed its total expected tax revenues, the government is operating with a:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Budget deficit
Explanation
A budget deficit occurs when a government spends more money than it takes in from taxes and other revenues, forcing it to borrow money to cover the difference.
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