High government expenditures can lead to a bigger
1: revenue.
2: stimulus.
3: deficit.
4: surplus.
Answer: c. deficit.
A deficit occurs when a government has more obligations than the revenues that are generated in a given period, which normally is a financial or a fiscal year. Militaristic governments need to spend more because they provide defense services, build public infrastructure, and social programs. They usually do not have sufficient income to spend the necessary amount of money. As costs go past the income, the consequence is a deficit in the budget. Governments, in line with the deficits, collect the funds by issuing bonds and other debt instruments. Indeed, non-stop public sector deficits result in building up new debts which may be problematic for a long-term economy if not dealt with properly.
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