A budget deficit occurs when expenditures exceed revenue.
- The term “budget deficit” is most commonly used to refer to government spending rather than business or individual spending.
- A budget surplus occurs when revenue is greater than government spending. Therefore, the government can use the surplus revenue to pay off the national debt.
- Budget surpluses are quite rare in modern economies because of the temptation for politicians to spend more money and cut taxes.
Another reason for not presenting a surplus budget is it symbolizes government’s lower concerns towards development.
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