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JAMB Economics 1978 Question 2

Question 2

Public Finance

A budget deficit means

  1. A.that a country is buying more than it is selling
  2. B.that a country is selling more than it is buying
  3. C.a government is spending more than it takes in taxation
  4. D.a government is spending less than it takes in taxation
  5. E.a government is spending as much as it takes in taxation.
Show the answer and explanation

Answer: C (a government is spending more than it takes in taxation)

Explanation

A budget deficit happens when government spending is greater than its revenue (mainly taxes).