Multiple Choice
Which of the following is an example of a restriction that the government places on the use of business property to address externalities?
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7. Externalities
Public Solutions to Externalities
Multiple Choice
Which of the following describes a surplus in the government budget?
A
Government expenditures exceed government revenues.
B
Government borrows money to finance its spending.
C
Government revenues exceed government expenditures.
D
Government revenues are equal to government expenditures.
Verified step by step guidance1
Step 1: Understand the concept of a government budget surplus. A surplus occurs when the government's total revenues are greater than its total expenditures during a given period.
Step 2: Define government revenues as the income the government receives, primarily from taxes, fees, and other sources.
Step 3: Define government expenditures as the total amount the government spends on goods, services, and transfer payments.
Step 4: Compare revenues and expenditures: if revenues exceed expenditures, the government has a surplus; if expenditures exceed revenues, there is a deficit.
Step 5: Recognize that borrowing money typically happens when there is a deficit, not a surplus, so borrowing is not a characteristic of a surplus.
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