Final answer:
Government spending and outlays represent the expenses incurred by the government, while government revenue denotes the income primarily from taxes. A budget deficit occurs when spending exceeds revenue, and government borrowing may be needed to cover this gap. The U.S. experienced a large deficit in 2009, indicating shifts in budgets due to various factors.
Step-by-step explanation:
Government spending and government outlays refer to the total expenditures of the federal, state, and local governments on services provided to the public. Government revenue or government earnings indicate the income received by the government primarily through taxes and other forms of income. A budget deficit occurs when government spending exceeds its revenue, while a budget surplus happens when revenue is greater than spending, leading to government borrowing to finance the deficit.
For example, a significant budget deficit was experienced by the U.S. government in 2009, when it spent approximately $1.4 trillion more than it collected in taxes. This scenario represents about 10% of the U.S. GDP for that year and signifies the largest deficit as a percentage of GDP since World War II.
Government budgets can fluctuate significantly due to policy decisions and unexpected events that affect tax and spending plans, thus impacting the balance between spending and revenue.