alleryStart learning →If government spending and taxes are equal, the government has a:
ABalanced budget
BBudget deficit
CBudget surplus
DGrowing debt
Answer & Solution
Correct answer: A. Balanced budget
1. There is a third case between deficit and surplus.
2. Spending above taxes gives a deficit and taxes above spending give a surplus.
3. If government spending and taxes are equal, it has a balanced budget.
4. Neither side then dominates.
_Source: OpenStax Principles of Macroeconomics for AP Courses 2e (CC BY 4.0), Ch 16 'Government Budgets and Fiscal Policy'_
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