This question is based on the following cartoon.
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Transcribed Image Text:**Title:** Understanding a Balanced Budget
**Overview:**
This educational resource is based on a cartoon from The Detroit News, illustrating the concept of a balanced budget and its implications for government revenue.
**Cartoon Description:**
The cartoon depicts a large wave labeled "THE ECONOMY" in the open sea. On top of the wave is a ship named "BALANCED BUDGET," sailing steadily with the flag stating "STEADY AS SHE GOES." This visual metaphor suggests that maintaining a balanced budget helps navigate the ups and downs of the economy smoothly.
**Text Below Cartoon:**
Reprinted with permission from The Detroit News.
**Discussion Question:**
What does a balanced budget mean in terms of government revenue?
**Answer Choices:**
A. Government revenue equals its spending.
B. Government revenues will decrease.
C. Government generates more revenue than it spends.
D. Government receives less revenue than it spends.
E. Government revenues will stay the same.
**Explanation:**
A balanced budget occurs when the revenue of a government is equal to its expenditures. This means that the amount of money the government brings in, mainly through taxes and other revenue sources, is equal to the amount it spends on public services and other expenditures. This situation helps maintain economic stability, as depicted by the steady ship in the cartoon.
**Answer Key:**
The correct option is A. Government revenue equals its spending.
By understanding the importance of a balanced budget, students can better appreciate the principles of fiscal responsibility and economic stability. This knowledge is crucial for comprehending broader economic policies and their impacts on society.
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