Budget balance improves, reducing any prior deficit

Steps:

• Calculate previous revenue: $2.5T ÷ 1.08 ≈$2.315T.
• Compute current balance: $2.5T revenue -$1.9T expenditure = $0.6T surplus.
• Note previous expenditure > $1.9T, so prior balance =$2.315T - (>$1.9T) likely negative (deficit).
• Revenue increase ($0.185T) + expenditure decrease (>0) widens positive balance, shrinking prior deficit.

Why B is correct:

• Deficit = expenditure - revenue; rising revenue and falling expenditure decrease this difference by the budget balance formula.

Why the others are wrong:

• A: Revenue growth and expenditure cut cannot widen the deficit gap.
• C: Insufficient data on prior expenditure to confirm a pre-existing surplus.
• D: Changes improve balance, so cannot shrink a surplus.

Final answer: B