Does Time Machine delete files in back-ups that are deleted on my Mac?
Not immediately. When space starts to get tight, Time Machine will start to delete the oldest file(s) to make more room, but this won't occur for some time.
if I need to restore a whole back-up, I don't want to restore previously deleted files.
You won't if you choose to restore from a backup that occurred after the date that you deleted the file.
If you absolutely do not want to keep the file in your Time Machine backups at all, you do have the option to go into Time Machine, find the file, and manually delete all versions of the file from past dates.