C Rationale: A budget surplus occurs when a government’s income exceeds its expenditure: there is
a negative PSNCR or PSDR. When a government’s expenditure exceeds its income, so that it
must borrow to make up the difference, there is a positive PSNCR and we say that the
government is running a budget deficit.
Ways in: If you recognised that a negative PSNC means no borrowing, you might have been able
to start eliminating some options…