Which term results when expenditures exceed revenues for a one-year period?

Which term results when expenditures exceed revenues for a one-year period?

• A. Deficit spending
• B. Subsidy
• C. Budget deficit
• D. National debt

Answer: (C)

In budgeting, a budget deficit occurs when the government’s expenditures for a given year exceed its revenues. This is the annual shortfall between what is spent and what is collected through taxes and other income. The phrase deficit spending describes the practice of spending more than is taken in, often financed by borrowing, which over time increases the national debt. Subsidies are payments to support activities and are not the measure of a yearly shortfall, and the national debt is the total amount owed from past deficits, not the single-year gap. So the correct term for a one-year excess of spending over revenue is a budget deficit.

In budgeting, a budget deficit occurs when the government’s expenditures for a given year exceed its revenues. This is the annual shortfall between what is spent and what is collected through taxes and other income. The phrase deficit spending describes the practice of spending more than is taken in, often financed by borrowing, which over time increases the national debt. Subsidies are payments to support activities and are not the measure of a yearly shortfall, and the national debt is the total amount owed from past deficits, not the single-year gap. So the correct term for a one-year excess of spending over revenue is a budget deficit.