Types of budgets, Managerial Economics

TYPES OF BUDGETS

1.     Deficit budget 

If the proposed expenditure is greater than the planned revenue from taxation and miscellaneous receipts, this is a budget deficit. The excess of expenditure over revenue will be met through borrowing both internally through the sale of Treasury Bills and externally from other organisations.

2.     Balanced budget

If the proposed expenditure is equal to the planned revenue from taxation and other miscellaneous receipts, this is a balanced budget.  Usually, balanced budgets are not presented, unless the expenditure is very limited.  It would mean the government would have to over-tax the population which can create disincentives.  It is to avoid this that the tax revenue is supplemented by borrowing.

3.     Surplus budgets

If the proposed expenditure is less than the planned revenue from taxation and other miscellaneous receipts, this is a surplus budget.  Usually, surplus budgets are not presented for they are deflationary and can create unemployment as the government takes out of the economy more than it puts back.

Posted Date: 11/30/2012 3:02:50 AM | Location : United States







Related Discussions:- Types of budgets, Assignment Help, Ask Question on Types of budgets, Get Answer, Expert's Help, Types of budgets Discussions

Write discussion on Types of budgets
Your posts are moderated
Related Questions
Disadvantages The effect on incentives High  progressive tax makes work and extra effort become less valuable. The effect on the willingness to accept risk

Buffer stocks and stabilization funds In this case the government buys up part of the supply when output is excessive, stores this surplus, and resells it to consumers in time

BALANCE OF PAYMENTS The Balance of Payments of a country is a record of all financial transactions between residents of that country and residents of foreign countries.  (Resi

ISOQUANT ANALYSIS In the long run it is possible for a firm to produce the same output using different combinations of two factors of production.  For instance it the two fact

THE STRUCTURE OF POPULATION AND SUPPLY OF LABOUR The structure (also called age distribution or composition) of population, or the number of people in the different age groups

Q. Show the Fixed Proportion Production Function? A fixed proportion production function is one in that technology needs a fixed combination of inputs, say labour and capital,

Problem: (a) (i) Assuming that a household uses a subjective discount rate of 10%, calculate the amount that she must spend on consumption per annum during her years of existe

In the national income analysis, investment refers to the value of than part of the aggregate output for any given time period which takes the form of construction of new structure

INSTRUMENTS OF CREDIT CONTROL The central bank employs several instruments to control aggregate credit in the country. While some instruments like the open market operations mi

Search Theory and Unemployment   You must understand the search and matching theories of unemployment in  the context of other theories of unemployment. With this objective  in