What is a budget surplus?

• A. When revenue exceeds spending
• B. When there is more money than spending
• C. When spending equals revenue
• D. When money is borrowed to cover shortfalls

Answer: (A)

A budget surplus happens when revenue exceeds spending, meaning the income coming in is more than the costs going out. In budgeting terms, revenue is the total money received (like taxes and other receipts), while spending is all the outflows for services, programs, and operations. When revenue is larger than spending, the extra funds are left over as a surplus that can be saved, used to reduce debt, or set aside for future needs. For example, if a governmentCollects 1 trillion in revenue but spends 0.95 trillion, the 0.05 trillion is the surplus. If spending equals revenue, that’s a balanced budget; if spending exceeds revenue, that’s a deficit, often financed by borrowing.