Final answer:
A shortfall created when the federal government spends more than it receives is a federal deficit. The 2020 U.S. federal government deficit reached about 15% of GDP, requiring the government to borrow funds to finance this spending and adding to the federal debt.
Step-by-step explanation:
A shortfall created when the federal government spends more in a fiscal year than it receives is a federal deficit. When government spending exceeds the amount collected in taxes, the difference is known as the budget deficit. Conversely, a budget surplus occurs when taxes exceed government spending. If the spending and taxes are equal, it results in a balanced budget. An example of a significant budget deficit occurred in 2020 when the U.S. federal government spent approximately $3.1 trillion more than it collected in taxes, accounting for about 15% of the U.S. Gross Domestic Product (GDP) for that year. This was one of the largest deficits relative to GDP since the massive borrowing during World War II. When there is a deficit, the government must borrow funds, which contributes to the federal debt -- the cumulative amount the government owes to cover past deficits.