Budget Surplus Definition

Steps:

• Recall that a budget surplus occurs when inflows exceed outflows in government finances.
• Define key terms: revenue as income from taxes and fees, expenditure as spending on public services.
• Compare to options: identify which matches revenue > expenditure.
• Eliminate mismatches based on economic concepts like trade balance and fiscal policy.

Why A is correct:

• By definition, a budget surplus means government revenue (taxes, fees) exceeds expenditure (spending), resulting in extra funds.

Why the others are wrong:

• B: Describes a trade deficit, unrelated to government budget.
• C: Expansionary fiscal policy involves increased spending or reduced taxes, leading to deficits, not surpluses.
• D: Rising national debt signals deficits, the opposite of a surplus.

Final answer: A