Question

In the last few years the U.S. government budget deficit has increased. Other things being the same, what does this mean?

1) The U.S. government has been spending more money than it has been collecting in revenue.
2) The U.S. government has been collecting more revenue than it has been spending.
3) The U.S. government has been balancing its budget.
4) The U.S. government has been reducing its spending.

Answer 1

An increase in the U.S. government budget deficit indicates that government spending has exceeded its revenue, leading to more borrowing to finance this deficit.

Step-by-step explanation:

When the U.S. government budget deficit increases, it means the U.S. government has been spending more money than it has been collecting in revenue. This situation occurs because of various governmental expenditures that surpass the taxes collected in a given fiscal year. For instance, in 2020, the federal government spent about $3.1 trillion more than it collected in taxes, with this deficit amounting to roughly 15% of the U.S. GDP for that year, marking the largest budget deficit relative to GDP since the government's borrowing during World War II. The rise in the budget deficit can be attributed to several factors, including declining tax revenues or increased spending on social safety nets and other programs.