Question

Explain following concept in your own words

Budget Deficit

Answer 1

It's an old idea. Anytime the term “deficit” is used, it refers to the government budget deficit. Simply put, a budget deficit is the result of total expenditures (i.e., capital and revenue expenditures) exceeding total government receipts (i.e., capital and revenue receipts). Therefore it can be expressed as:

BD = BE or TR (RE + CE) − BR or (RR + CR) When TE > TR

When a government spends more than it takes in during a given time frame, usually a year, there is a budget deficit. Put another way, the government has a deficit if it spends more money on defence, social services, education, and roads than it takes in from taxes and other sources.