What is the economic term for a situation where the total expenses surpass the amount of income?

The correct answer is "Deficit" because this term specifically refers to a financial situation where expenses exceed income. In a deficit scenario, an individual, organization, or government spends more than it earns, leading to a shortfall that often needs to be addressed through borrowing or cutting costs. This concept is crucial in economics as it highlights the need for balanced budgets and sustainable financial practices.

Understanding deficits is essential as they can have significant implications for economic policy and financial stability. Conversely, a surplus, which refers to the situation where income surpasses expenses, represents a healthy state of finances but is not applicable in this context. Liquidity relates to the availability of cash or easily convertible assets and does not directly address the relationship between income and expenses. Revenue, while closely linked to the concept, specifically refers to the total income generated, not the excess of expenses over income.