Question

Fiscal Deficit occurs when :

• A. Government Expenditure exceeds Government Revenue (Excluding Borrowings)
• B. Government Revenue exceeds Government Expenditure
• C. Both Government Expenditure and Government Revenue are the same.
• D. Government Expenditure exceeds GDP.

Hint:

Fiscal deficit is the gap that the government fills by borrowing.

Answer 1

The Correct Option is A

Step 1: Think of a household.
A family earns 50,000 and spends 60,000. The gap of 10,000 must come from a loan. That gap is like a fiscal deficit.

Step 2: Apply it to the government.
The government's income means taxes and non-debt receipts. Its spending is the total expenditure. The gap between them is met by borrowing.

Step 3: Read the options with this picture.
Only one option says that spending is more than income excluding borrowings. Surplus and balanced budget are the other two cases and are not deficits.

Step 4: Pick the answer.
So option 1 is correct.

Final Answer:
The borrowing need is the excess of expenditure over non-borrowing income, so option 1 is right. \[ \boxed{\text{Option 1}} \]