Federal budget deficit =

This scenario describes a budget surplus, not a deficit. When the government spends less than it collects in taxes, it generates excess funds that can be used to pay down existing debt or save for future expenses. A surplus indicates financial health rather than the necessity of borrowing.

This condition refers to a trade surplus, which is not directly related to the federal budget deficit. A trade surplus occurs when a country sells more goods and services abroad than it purchases, thereby generating additional revenue. While a trade surplus can positively impact the economy, it does not influence the government’s borrowing or spending directly.

A decrease in interest costs would imply lower expenses for servicing existing debt but does not directly address the budget deficit itself. Interest costs falling might provide some relief to the government budget, yet it does not prevent the need for borrowing when expenditures exceed revenues.