Government Budget Components

Steps:

• Identify the core elements of a government budget as inflows and outflows of public funds.
• Recall that budgets track revenue sources and spending allocations for fiscal planning.
• Match choices to budget items: focus on public finances, not private or trade sectors.
• Select the pair directly representing government revenue and expenditure.

Why D is correct:

• A government budget fundamentally consists of tax revenue (income) and public expenditure (spending), as defined in fiscal policy frameworks like the balanced budget equation: Revenue - Expenditure = Surplus/Deficit.

Why the others are wrong:

• A: Exports and imports relate to balance of payments in international trade, not domestic government budgeting.
• B: Consumption and factor income are components of national income accounts (e.g., GDP), not government-specific budgets.
• C: Investments and savings are private sector aggregates in macroeconomic models like IS-LM, outside government fiscal statements.

Final answer: D