What characterizes a balanced budget in government finance?

A balanced budget in government finance is characterized by the situation where total government expenditure is equal to total revenue. This means that the government is not borrowing money or running a deficit, and it is not accumulating excess funds or a surplus. When revenues and expenditures are equal, it reflects a careful fiscal policy where the government is effectively managing its finances without creating debt or wasting resources.

This situation is important because it indicates fiscal responsibility and stability. Governments aim to achieve a balanced budget to avoid unnecessary debt, ensure sustainability, and maintain trust among investors and the public. In contrast, when total government expenditure is less than total revenue, there would be a surplus, and if expenditures exceed revenue, it leads to a budget deficit. Thus, the answer correctly identifies the condition that must be met for a budget to be termed 'balanced.'