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Surplus Budget and Deficit Budget. - Economics

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Distinguish between Surplus budget and Deficit budget.

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Solution

Points Surplus Budget Deficit Budget
Meaning A surplus budget takes place when the estimated receipts are more than estimated expenditure. A deficit takes place when its estimated expenditure is more than estimated receipts.
Formula Surplus Budget = (Estimated Receipts > Estimated Expenditure) Deficit Budget = (estimated Receipts < Estimated Expenditure)
Preference by Countries A country will prefer surplus budget because the surplus can be used to repay outstanding loans or liabilities. A country does not prefer deficit budget, as it affects economic growth and development.
Leads to
It leads to a decrease in the liabilities of the government or causes an increase in its savings. It leads to an increase in the liabilities of the government or causes a reduction in its reserves.
Concept: Types of Budget
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