What is a fiscal deficit?

April 15, 2024 by rawan239

a gap between total expenditure and total receipts of the government. It occurs when the government spends more money than it receives in revenue. The government can finance a fiscal deficit by borrowing money, printing money, or reducing its assets.

Option A is incorrect because it describes a trade deficit. A trade deficit is a gap between the value of a country’s exports and imports. When a country imports more goods and services than it exports, it has a trade deficit.

Option B is incorrect because it describes a current account deficit. A current account deficit is a gap between a country’s exports of goods and services, income from investments abroad, and foreign aid, and its imports of goods and services, payments on foreign debt, and net private transfers. When a country’s current account is in deficit, it is borrowing more money from other countries than it is lending to them.

Option D is incorrect because it describes a budget deficit. A budget deficit is a gap between a government’s total revenue and total expenditure. When a government has a budget deficit, it is spending more money than it is taking in.