Question

Fiscal deficit is defined as:

• A. The total amount of money the government borrows.
• B. The difference between government expenditure and revenue.
• C. The total amount of government debt.
• D. Government borrowing from international sources.

Answer 1

The Correct Option is B

The fiscal deficit is a key economic indicator used to evaluate a government's financial standing. It represents the gap between a government's spending and its revenue. Below is an analysis of each option to clarify its meaning:

• The total amount of money the government borrows: This describes borrowing, but it is not the sole definition of the fiscal deficit. Borrowing can be used to finance fiscal deficits.
• The difference between government expenditure and revenue: This is the accurate definition. A fiscal deficit arises when a government's spending surpasses its income.
• The total amount of government debt: Although connected, this refers to the accumulated sum of borrowings and does not specifically define the fiscal deficit.
• Government borrowing from international sources: This is a particular form of borrowing and does not constitute the definition of fiscal deficit.

Therefore, the fiscal deficit is defined as the difference between government expenditure and revenue.