Question

Governments create budget deficits when they:

a. increase taxation without increasing spending
b. spend more money that they take in through taxes
c. cannot agree on a spending bill that creates a federal budget.
d. refuse to pay for mandatory spending programs

Answer 1

b. spend more money that they take in through taxes

Step-by-step explanation:

A budget deficit occurs when government spending is higher than government revenue.

Government revenue may come from several sources, especially from taxes, but also from public debt, and from the printing of currency, while government spending can be in the form of transfer payments, subsidies, infraestructure bills, and so on.

When government revenue is not enough to provide for government spending, the government runs a deficit, and will have to either raise taxes, take on more debt, or print more currency.