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

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Rebekah Harmon

Business

5 August, 23:09

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

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Answers (1)

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Roberto Hendrix · Answer 1

The answer is B. government's spending exceeds its tax revenues

Explanation:

Government budget records deficit if its spending is more than its revenue. The main source of government revenue is from tax. And government record surplus if its revenue is more than its spending.

One of the disadvantages of government budget deficit is that inflation rate will be rising. Government might spend to stimulate the economy.