What characterizes a deficit in a government's finances?

A deficit in a government's finances is characterized by expenditures that exceed revenues. This situation implies that the government is spending more money than it is bringing in through various sources such as taxes and other income. When a government operates at a deficit, it is required to borrow funds to cover the shortfall, which can lead to an increase in national debt.

Understanding this concept is crucial in public finance, as ongoing deficits can impact a government's ability to fund essential services, maintain infrastructure, and ensure long-term economic stability. Managing a deficit requires careful planning and financial management to avoid adverse effects on economic growth and public trust.