Government spending in the United States has grown over time and now accounts for more than forty percent of United States national income. Does this mean that government has been consistently running a budget deficit?
What will be an ideal response?
A budget deficit arises when the government's spending exceeds its tax revenues. While government spending has been increasing over the last few decades, tax revenues have also grown. Thus, the given information does not imply that the United States government has been running a deficit. Whether the United States government has been running a deficit or a surplus will depend on how much tax revenue it earned compared to how much it spent during these years.
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