Question

What creates a budget surplus such as the one that occurred in the mid-90s through 2000? Spending ___________and revenue (tax income) ___________

Answer 1

A budget surplus occurs when the government's tax income exceeds its spending. Factors such as strong economic growth, increased tax rates, and reduced government spending can create a budget surplus.

Step-by-step explanation:

A budget surplus occurs when the government's tax income exceeds its spending. In the mid-90s through 2000, there was a budget surplus due to a sharp increase in tax revenues and a decrease in expenditures on transfer payments. This unexpected surplus was a result of various factors such as strong economic growth, increased tax rates, and reduced government spending. For example, the budget surplus during this period was largely driven by the booming economy, which led to higher tax revenues.