Balanced Budget in Economics

Steps:

• Identify the question: It asks for the condition defining a balanced budget.
• Recall the core economic definition: A balanced budget occurs when inflows equal outflows for government finances.
• Evaluate choices: Match each to fiscal policy concepts, focusing on government accounts.
• Select the match: Government revenue equaling spending fits the standard definition.

Why C is correct:

• By definition, a balanced budget exists when total government revenue (from taxes, fees) equals total government spending, resulting in neither deficit nor surplus.

Why the others are wrong:

• A: Direct and indirect taxes relate to tax structure, not overall budget balance.
• B: Equal exports and imports define trade balance, not fiscal budget.
• D: Equal money demand and supply describe monetary equilibrium, not government budget.

Final answer: C