What characterizes a budget deficit?

A budget deficit is characterized by a financial situation in which a government's expenditures surpass its revenues during a specific period, often a fiscal year. This means that the government is spending more money than it is taking in through various sources of revenue, such as taxes and fees. As a result, the government must borrow funds to finance its operations, leading to an increase in its national debt.

This situation can arise due to various factors, such as increased government spending on public services, infrastructure projects, or responding to economic challenges, without a corresponding increase in revenue. Understanding budget deficits is crucial for analyzing fiscal policy and its long-term implications on the economy, including the need for careful management of public finances to avoid excessive debt burdens.

The other scenarios describe different financial situations. A scenario where revenues exceed expenditures indicates a budget surplus, a balanced national budget shows equality between revenues and expenditures, and an increase in savings for future investments relates to proactive financial management rather than a deficit situation.