Question

Difference between surplus and deficit budget?

Answer 1

Surplus budget is a situation where income exceeds expenditure .Thus ,surplus budget is a situation when government spends less than what it has earned as income in form of taxes etc. On the contrary , a deficit budgetis a situation when government's expenditure is more than it's revenue.

Answer 2

Some of the main differences between budget surplus and budget deficit are listed below.

• A deficit budget situation means that the expenses of a government has exceeded the tax income during that period, whereas a surplus budget scenario means that the tax income of a government exceeds its expenses.

• In general, budget deficit is very common, while budget surplus occurs rarely.

• During periods when budget surplus occurs tax reduction may be granted, but which is not available during budget deficit periods.

• Interest rate on and treasuries and securities will be high during the period of budget surplus, which is not common during budget deficit period.

• Spending of a government will be high when there is a budget surplus, where as saving, cost cuttings, and borrowing will be high when there is a budget deficit.


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