Types of budget, Microeconomics

Types of budget:

Surplus Budget: A surplus budget occurs when the expected government revenue is planned to exceed the proposed government expenditure. It can be achieved by reducing government expenditure or increasing taxation or both. A surplus budget is usually adopted to reduce inflationary pressures because it reduces aggregate effective demand in the economy.

Deficit Budget:A deficit budget occurs when the government revenue estimate is less than the proposed government expenditure. The fiscal deficit can be financed by raising loans from both internal and external sources. A deficit budget may be used to stimulate domestic production during economic recession or depression.

Balanced Budget: A government budget is balanced when its revenue estimate is equal to the intended expenditure. It is also called a neutral budget because it is usually adopted to keep the level of economic activities stable as in the preceding year.

Posted Date: 1/3/2013 1:45:08 AM | Location : United States







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