ACCA Applied Knowledge · Business and Technology · Macroeconomic factors
A government has a budget deficit and funds it by issuing bonds. Which statement describes a budget deficit?
A budget deficit occurs when government spending exceeds its tax revenue in a period, with the gap financed by borrowing such as issuing bonds. It differs from a trade deficit, where imports exceed exports, and from deflation, which is a general fall in prices.
- AGovernment spending exceeds government tax revenue in the periodCorrect
- BImports exceed exports in the period
- CPrices are falling across the economy
Explanation
A budget deficit arises when government expenditure is greater than tax and other revenue, and is financed by borrowing such as bond issues. Imports exceeding exports is a trade deficit, and falling prices describes deflation.
Did you get it right without looking?
One question tells you little. A timed set on Macroeconomic factors shows your real accuracy, how long you take and where you lose marks.
More Macroeconomic factors questions
- An economy has a labour force of 20 million. Initially 19 million are employed. A downturn causes 600,000 people to lose their jobs, and 200…
- Which of the following is an advantage to a business of operating within a single currency trading bloc such as the eurozone?
- A government wants to keep its currency's exchange rate from falling, and the central bank uses monetary policy to do this. Which action wou…
- The central bank of a country raises its base interest rate to control inflation. Which of the following is the most likely direct effect on…
- A country's central bank notices that prices are rising because firms face higher imported oil and energy costs and pass these on to custome…
- Which of the following is an example of monetary policy rather than fiscal policy?