A fiscal deficit occurs when the government:
Correct answer: B. Has total expenditure greater than its revenue, excluding borrowing receipts
- A. Collects more tax revenue than its total expenditure
- B. Has total expenditure greater than its revenue, excluding borrowing receipts
- C. Has a trade deficit with other countries
- D. Repays more public debt than it issues
Explanation
A fiscal deficit exists when government expenditure exceeds its non-borrowed receipts, requiring financing through borrowing or other means. It is different from a trade deficit, which concerns exports and imports, and from the separate question of debt repayment.
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About Public Finance
Government revenue and expenditure are analysed through taxation, public borrowing, budgets, subsidies, transfers and public debt. The topic explains how fiscal policy affects resource allocation, income distribution, economic stability and growth, while distinguishing direct from indirect taxes, progressive from regressive taxation, and public goods from goods supplied by private markets.
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