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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.
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What is Expenditure Function? The Expenditure Function: When preferences satisfy the local nonsatiation assumption, in that case v(p, m) will be strictly increasing into m.
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Distinguish among the terms of trade and the balance of trade for a country. Definition of terms of trade a) The amount of a given amount of export goods essential to buy
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