CAIE A-Level Economics 5.2.2 Budget Deficit and Surplus

CAIE A-Level Economics 5.2.2 Budget Deficit and Surplus
Cambridge International AS & A Level Economics 9708 syllabus for exams in 2026, 2027 and 20282026–2028

Practise calculating budget balances, linking deficits to national debt and automatic cyclical effects and evaluating whether surplus, deficit or balance suits current conditions.

How this is tested

  • calculate a surplus when revenue exceeds spending and a deficit when spending exceeds revenue
  • explain how recession raises welfare spending and lowers tax receipts, widening the deficit
  • evaluate the preferred balance using demand conditions, debt interest, investment and policy aims

Question 23

[Maximum number: 1]

The table shows government spending and revenue over a three-year period.

Table for Question 23 — CAIE A-Level Economics

What can be concluded from the data?

A

A budget surplus becomes a budget deficit in year 3 .

B

National debt is likely to be falling by the end of year 3 .

C

The current account balance is in equilibrium in year 2 .

D

The economy is at full employment equilibrium in year 2.