Which term is defined as the difference between annual government spending and revenue?

Which term is defined as the difference between annual government spending and revenue?

• A. Inflation
• B. The Federal Reserve
• C. Deficit
• D. National Debt

Answer: (C)

A budget deficit is the difference between what the government spends in a year and what it collects in revenue. When spending exceeds revenue, the gap must be financed by borrowing, which adds to the national debt over time. This concept is about the annual fiscal balance, whereas the national debt is the total amount owed from past deficits and surpluses. Inflation describes rising prices, not the budget gap, and the Federal Reserve is the central bank, not a measure of yearly spending versus revenue. If revenue were larger than spending, that would be a surplus.

A budget deficit is the difference between what the government spends in a year and what it collects in revenue. When spending exceeds revenue, the gap must be financed by borrowing, which adds to the national debt over time. This concept is about the annual fiscal balance, whereas the national debt is the total amount owed from past deficits and surpluses. Inflation describes rising prices, not the budget gap, and the Federal Reserve is the central bank, not a measure of yearly spending versus revenue. If revenue were larger than spending, that would be a surplus.