Question

Fiscal deficit is defined as:

• A. The total amount of money the government borrows.
• B. The difference between government expenditure and revenue.
• C. The total amount of government debt.
• D. Government borrowing from international sources.

Answer 1

The Correct Option is B

Fiscal deficit is an important concept in economics, particularly when assessing a government's financial health. It can be defined as the difference between what a government spends and what it earns in terms of revenue. Let's go through the explanation of each option to ensure clarity:

• The total amount of money the government borrows: This refers to borrowing but does not exclusively define the fiscal deficit. The borrowing can be a way to cover fiscal deficits.
• The difference between government expenditure and revenue: This is the correct definition. Fiscal deficit occurs when a government's expenditures exceed its revenue.
• The total amount of government debt: While related, this option refers to the cumulative amount of borrowing and does not specifically define fiscal deficit.
• Government borrowing from international sources: This is a specific type of borrowing and is not the definition of fiscal deficit.

In conclusion, fiscal deficit is defined as the difference between government expenditure and revenue.