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JAMB Economics 1979 Question 31

Question 31

Public Finance

If a government is running a deficit, this means

  1. A.terms of trade are unfavourable
  2. B.more projects cannot be undertaken
  3. C.tax inflow is greater than expenditure
  4. D.aggregate demand is greater than aggregate supply
  5. E.tax inflow is less than expenditure.
Show the answer and explanation

Answer: E (tax inflow is less than expenditure.)

Explanation

A budget deficit means government spending is greater than its revenue from taxes.