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Questions
What a surplus budget?
Explain surplus budget.
Explain the concept of surplus budget.
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Solution
When projected income for the year exceed projected expenses, the budget is considered to be in surplus. The anticipated revenue of the government exceeds the intended expenditure.
The government’s financial stability is demonstrated by the surplus budget. The government can use a surplus budget policy in cases of excessive inflation since it will lower aggregate demand. People’s disposable incomes, which could have been saved and used for capital development or spent on consumption, are decreased when taxes are raised. Aggregate demand will fall as a result of government spending falling short of revenue, which will lower the level of prices.
Surplus budget: Govt. Receipts > Govt. Expenditures
