Question
A personal budget deficit is a result of __ A __ spending more than you're earning. B ) __ taking out an overdraft. ...earning more than you're spending. D ) ...rising inflation.
Answer
4.4
(128 Votes)
Yana
Elite · Tutor for 8 years
Answer
A
Explanation
## A deficit in a personal budget entails expenses that surpass the income. Choosing which of the above mentioned four scenarios results in such a deficit needs a clear understanding of each option's implications. ## Option A states "Spending more than you're earning." This is essentially the definition of a budget deficit - your outflows (expenses/spending) exceed your inflows (income/earnings). ## Option B alludes to "Taking out an overdraft". Overdraft here is merely a line of credit that allows the account owner to spend money even when there’s no funds left in said account; but it's not necessarily a budget deficit. Unless depressingly perennial, an overdraft could be a result of mismanagement of finances rather than a sustained offensive such as a budget deficit.## Option C pronounces "Earning more than you're spending," which is essentially a situation of surplus or savings and is the exact opposite of a budget deficit.## Finally Option D refers to "Rising inflation", inflation doesn't directly cause a personal budget deficit. While increased inflation might cause prices to raise, thus indirectly stretching your budget, it's eventually up to personal financial decisions to manage living withing means and hence, keep away from a deficit scenario.