ECONOMICS
FISCAL POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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When tax revenue is greater than government spending
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When government spending is greater than tax revenue
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The source of finance for government spending
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A tax on spending, on goods/services
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Detailed explanation-1: -What Is A Budget Surplus? Budget surplus occurs when the government’s earning through tax revenues is more than its spending in the current quarter or year. It signifies that an economy is moving in the right direction with its government having a considerable earning power.
Detailed explanation-2: -A deficit occurs when the federal government’s spending exceeds its revenues. The federal government has spent $460 billion more than it has collected in fiscal year (FY) 2023, resulting in a national deficit.
Detailed explanation-3: -A budget surplus is when income or revenue exceeds expenditures. Governments and companies with surpluses have additional money that can be reinvested or used to pay off debts. The opposite of a surplus is a deficit, which occurs when spending exceeds revenues.
Detailed explanation-4: -Budget deficits occur when expenses exceed revenue and for a nation, they can lead to economic instability, such as inflation. Using fiscal policy to promote economic growth to increase tax revenue and decrease spending can decrease a deficit.
Detailed explanation-5: -A budget surplus occurs when tax revenue is greater than government spending. With a budget surplus, the government can use the surplus revenue to pay off public sector debt. Budget surpluses are quite rare in modern economies because of the temptation for politicians to spend more money and cut taxes.