Question

Explain the types of a government budget.

Explain the types of budget?

Answer 1

The types of government budgets are as follows :

• Balanced budget: A balanced budget refers to a situation where the government's estimated revenue is equal to its planned expenditure. In reality, achieving perfect balance is rare, making this mostly a theoretical concept.
  Balanced budget = Total budget revenue – Total budget expenditure = 0
• Surplus budget: A surplus budget occurs when the government's projected revenue is greater than its expected spending. This type of budget is typically used during inflationary periods to reduce effective demand and control rising prices.
  Surplus budget = Government revenue – Government expenditure
• Deficit budget: A deficit budget happens when the government plans to spend more than it expects to earn in revenue. Such a budget is usually implemented during times of economic depression to boost effective demand and encourage economic recovery.
   That is, Deficit budget = Government expenditure > Government revenue