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CUET Economics 2025 PYQs22 May Shift 1. Free, no login required.

Macro

past year questions, CUET Economics 2025 22 May Shift 1

Government Budget

past year questions, Macro, CUET Economics 2025 22 May Shift 1

Easy

Budgetary deficits must be financed by either taxation, borrowing or printing money. Governments have mostly relied on borrowing, giving rise to......

Solution

✅ Correct Option: 4

Option 1 -> Government expenditure is what creates the deficit, not what borrowing gives rise to.

Option 2 -> Government surplus occurs when revenue exceeds expenditure, which is opposite to a deficit situation.

Option 3 -> Government budget is simply a financial plan, not a consequence of borrowing.

Option 4 -> Government debt accumulates when governments borrow to finance deficits.

Hence, Option 4: Government debt -> When governments finance budgetary deficits through borrowing (issuing bonds, securities, or taking loans), they create financial obligations that must be repaid in the future. This accumulated borrowing over time builds up as government debt or public debt. The continuous reliance on borrowing to cover the gap between expenditure and revenue leads to increasing levels of national debt. -> correct

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