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JAMB Economics 2001 Question 42

Question 42

Public Finance

National debt is an expected outcome of a

  1. A.deficit budget
  2. B.consolidated budget
  3. C.balanced budget
  4. D.surplus budget
Show the answer and explanation

Answer: A (deficit budget)

Explanation

When a government spends more than its revenue (a deficit budget), it borrows to cover the gap, creating national debt.