What situation occurs when there is a budget surplus?

A budget surplus occurs when the income or revenue collected exceeds the expenditures or spending over a specific period. This situation indicates that an individual, business, or government has more money coming in than going out, leading to a positive balance.

This scenario is significant because it provides opportunities for saving, investing, or reducing existing debt. A budget surplus can facilitate future growth and financial stability, allowing the entity to allocate surplus funds towards projects, savings, or debt repayment, enhancing overall fiscal health.

The other scenarios involve situations of imbalance, such as spending more than is earned, breaking even with no surplus or deficit, or increasing debt, which do not accurately define a budget surplus.