When does the government experience a surplus?

A government experiences a surplus when its tax revenues exceed its expenditures. This situation indicates that the government is able to collect more money through taxes than it is spending on public services, infrastructure, and other expenses. The surplus can be used for various purposes, such as paying down debt, saving for future needs, or investing in programs that benefit the public.

In contrast, when tax revenues are lower than expenditures, the government faces a deficit. Equal revenues and expenditures indicate a balanced budget, while a decrease in GDP typically reflects poorer economic performance but does not directly determine whether the government has a surplus or deficit. Understanding the concept of surplus in this context is crucial as it impacts economic policies and government financial stability.