The correct answer is: B. equal to government income.
Government expenditure is the total amount of money that the government spends on goods and services. Government income is the total amount of money that the government receives from taxes, fees, and other sources. In an economy that is in equilibrium at the point where plans to save and to invest are equal, government expenditure must be equal to government income. This is because, in equilibrium, the total amount of money that is spent in the economy must equal the total amount of money that is earned in the economy. If government expenditure were greater than government income, then the government would be spending more money than it was taking in, and the economy would be in a state of deficit. If government expenditure were less than government income, then the government would be taking in more money than it was spending, and the economy would be in a state of surplus.
Here is a brief explanation of each option:
- Option A: zero. This is not possible, because government expenditure is always positive. Even if the government does not spend any money on goods and services, it will still have to spend money on things like salaries and pensions for its employees.
- Option B: equal to government income. This is the correct answer, as explained above.
- Option C: larger than government income. This is not possible, because the government cannot spend more money than it takes in. If it did, it would have to borrow money, which would add to the national debt.
- Option D: negative. This is also not possible, because the government cannot spend more money than it has. If it did, it would have to print more money, which would cause inflation.