Distinguish between surplus and deficit budget?
Answers
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.
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On the contrary , a deficit budget is a situation when government's expenditure is more than it's revenue.
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Explanation:
For an economy to be stable, the surplus and deficit budgets must be at equilibrium in a given fiscal period. However, this is not always the case as a surplus or deficit is a common occurrence in an economy. These affect government budgets and the entire economic activities including production and money spending habits, just to name a few. The two terms correlate, as they have to balance out.
What is Surplus?
This is an amount of a resource or asset that exceeds the utilized portion. It’s commonly used in the description of excess assets such as capital, income, profits, and goods, and occurs when there is a disequilibrium between demand and supply of a product or service.
What is Deficit?
This is a situation whereby a required resource, especially money, is less than what is required, hence expenses exceed revenues. In a budget, the inflow of money falls short of the outflow, which can be a result of overspending