I am Canadian blood and iron life on the ship?

The second alternative is the more correct.

The budget of a Government consists of revenue and expenses. The revenues come mainly from taxes and expenses vary according to the needs and purposes of the Government.

Since money is limited, the Government needs to make resource allocation decisions. That is, the decision to use public money in one sector means a waiver of investments in other sectors.

This was the case during World War II. If Government spending on defense increased, other sectors lost, that is, the government allocated more resources in defense.