What term describes a situation where spending exceeds income?

The term that describes a situation where spending exceeds income is "deficit." When an individual, organization, or government spends more money than it receives in revenue or income, it creates a deficit. This is an important concept in economics and finance because it indicates that expenses are greater than financial resources available, which may lead to borrowing, increased debt, or a need to reduce spending in the future.

The other terms relate to different financial scenarios: debt refers to the total amount of money borrowed that is yet to be repaid, surplus indicates a situation where income exceeds spending, and equilibrium refers to a state of balance between income and expenditures. Hence, deficit is the most accurate term for a scenario where the outflow of funds surpasses the inflow.