Canadian Securities Course (CSC) Level 1 Practice Exam

When is the government considered to be operating at a surplus?

1. When spending is less than revenue

2. When spending equals revenue

3. When revenue is less than spending

4. When deficits are high

The correct answer is: When spending is less than revenue

The government is considered to be operating at a surplus when spending is less than revenue. This means that the government is collecting more money (revenue) than it is spending, resulting in a surplus. It indicates that the government's financial position is strong and that it is not relying on borrowing to cover its expenses. On the other hand, when revenue is less than spending, it results in a deficit, as in option C. Option B, when spending equals revenue, describes a balanced budget rather than a surplus. Option D, when deficits are high, does not describe a surplus situation.