alleryStart learning →A revenue deficit implies that the government is
Arunning a balanced budget
Blending to the private sector
Cdissaving and drawing on others
Dsaving more than it invests
Answer & Solution
Correct answer: C. dissaving and drawing on others
1. A revenue deficit means current spending exceeds current income.
2. The shortfall must be met from someone else's savings.
3. So the government is **dissaving**, drawing on the savings of other sectors to fund consumption.
4. It must then borrow for consumption as well as investment, building up debt and interest liabilities.
_Source: syllabus Introductory Macroeconomics, Ch 5 "Government Budget and the Economy", section 5.2.1 Measures of Government Deficit_
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