Final answer:
Tax revenue and government expenditures are crucial components of fiscal policy, impacting budget surplus or deficit and influencing the economy.
Explanation:
Tax revenue and government expenditures are interrelated components of a country's fiscal policy. Tax revenue is the income the government collects from individuals and businesses, which is then used to fund government services and activities. On the other hand, government expenditures represent the total amount of money the government spends on various programs and services.
When tax revenue exceeds government expenditures, it leads to a budget surplus, which can be used to pay off debt or invest in infrastructure. Conversely, when government expenditures surpass tax revenue, it results in a budget deficit, requiring the government to borrow money to cover the shortfall.
The relationship between tax revenue and government expenditures plays a crucial role in shaping a country's economy, influencing factors such as public debt, economic growth, and resource allocation.
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