Question

If the federal government collects more in taxes during a given year than it spends during that year, we have a federal budget deficit.

a) True
b) False

Answer 1

The statement is false because more taxes collected than spent constitutes a budget surplus, not a deficit.

The correct option is b.

Step-by-step explanation:

If the federal government collects more in taxes during a given year than it spends during that year, this does not result in a federal budget deficit.

The correct statement is: False. When the government receives more in taxes than it spends, it results in a budget surplus. The term budget deficit refers to a situation where the government spends more than it collects in taxes.

For example, the U.S. government experienced a large budget deficit in 2020, spending $3.1 trillion more than it collected in taxes. This created a deficit about 15% of the U.S. GDP, which was a significant increase from previous years.

The correct option is b.