Home › AP Macroeconomics › Economics › Government Budgets and Fiscal Policy › When the federal government spends more money th…
When the federal government spends more money than it receives in taxes in a year, it runs a:
ABudget deficit
BBudget surplus
CBalanced budget
DTrade surplus
Answer & Solution
Correct answer: A. Budget deficit
1. The budget balance depends on which side is larger.
2. Government receives money in taxes and pays out in spending.
3. When it spends more money than it receives in taxes, it runs a budget deficit.
4. The opposite case gives a surplus.
_Source: OpenStax Principles of Macroeconomics for AP Courses 2e (CC BY 4.0), Ch 16 'Government Budgets and Fiscal Policy'_
Related questions
An economy in recession would call for which kind of fiscal policy under the aggregate demA tax that is proportional at low incomes but regressive above a wage limit describes the:The standardized employment deficit is described as eliminating the impact of:The very large budget deficit in 2009 is attributed to a combination of discretionary poliWhich model is described as useful in judging whether expansionary or contractionary policContractionary fiscal policy is described as shifting aggregate demand in which direction?Expansionary fiscal policy is described as shifting aggregate demand in which direction?Discretionary fiscal policy occurs when the government passes a new law that explicitly ch