Asituation in which the government spends more than it takes in is a

national debt

budget surplus

budget deficit

balanced budget

budget deficit

Explanation:

A budget deficit occurs when expenses exceed revenue and indicate the financial health of a country. The government generally uses the term budget deficit when referring to spending rather than businesses or individuals. Accrued deficits form national debt.

Budget Deficit Explained

In cases where a budget deficit is identified, current expenses exceed the amount of income received through standard operations. A nation wishing to correct its budget deficit may need to cut back on certain expenditures, increase revenue-generating activities, or employ a combination of the two.

KEY TAKEAWAYS

* A budget deficit happens when current expenses exceed the amount of income received through standard operations.

* Certain unanticipated events and policies may cause budget deficits.

* Countries can counter budget deficits by raising taxes and cutting spending.

The opposite of a budget deficit is a budget surplus. When a surplus occurs, revenue exceeds current expenses and results in excess funds that can be allocated as desired. In situations where the inflows equal the outflows, the budget is balanced.

In the early 20th century, few industrialized countries had large fiscal deficits, however, during the First World War deficits grew as governments borrowed heavily and depleted financial reserves to finance the war and their growth. These wartime and growth deficits continued until the 1960s and 1970s when world economic growth rates dropped.

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