Chapter 30, Problem 1MCQ

To determine

Correct option regarding consequence of government expenditure exceeding tax revenue.

Explanation of Solution

An overrun in spending over income results in a budget deficit, which can be a sign of a nation's financial stability. The phrase is frequently used to describe government expenditure rather than that of companies or people. Budget deficits have an impact on the overall amount a country owes to creditors, the overall of its yearly budget deficits, and the national debt.

Current costs surpass the amount of money obtained via routine operations when a budget deficit is detected. A government may boost income generating activities or reduce specific expenditures in order to balance the country's budget deficit, also known as a fiscal deficit.

Thus, from the above we can conclude that the correct option is B.