Budget Deficit
Definition
A budget deficit occurs when a government spends more money than it collects in revenue during a specific period, usually a fiscal year.
Analogy
Imagine you have $100 to spend on video games, but you end up spending $120. This means you have a budget deficit of $20 because you spent more than what you had.
Related terms
National Debt: The total amount of money that a government owes to its creditors, accumulated over time from budget deficits.
Fiscal Policy: The use of government spending and taxation to influence the economy.
Revenue: The income generated by the government through taxes and other sources.
"Budget Deficit" appears in:
Study guides (1)
Practice Questions (5)
- If the government wants to reduce the budget deficit, which fiscal policy action should it implement?
- What is the difference between a budget deficit and a budget surplus?
- How is the national debt different from a budget deficit?
- How might the government finance a budget deficit?
- What is one potential consequence of issuing government bonds to finance a budget deficit?
Resources
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