Which description defines a budget surplus?

• A. When revenue equals spending
• B. When there is more government debt
• C. When revenue exceeds spending
• D. When spending exceeds revenue

Answer: (C)

A budget surplus happens when the government brings in more revenue than it spends during a given period. Revenue includes taxes and other receipts, while spending covers all government expenditures like programs, services, and interest on debt. When revenue exceeds spending, there are extra funds that can be used to pay down debt, save for the future, or invest in additional projects. This is best described by the situation where revenue exceeds spending. If revenue were to equal spending, that would be a balanced budget. If spending exceeds revenue, that creates a deficit. Simply having more debt is a result of past deficits, not the immediate definition of a surplus.