8/15/2023 0 Comments Define budget and its types![]() ![]() In modern economies, most of the budget are of this nature. Deficit budget – when estimate government receipts are less than the government expenditure. The surplus budget should not be used in a situation other than the inflationary gap as it may lead to unemployment and low levels of output as an economy.ģ. This inflation gap can be corrected by lowering the level of public expenditure. As a result, the aggregate demand will fall. This would increase the revenue of the government but reduce the purchasing power of the people. This inflationary gap can be corrected by lowering the level of effective demand in the economy. This has to be checked particularly in the interest of those who have more or less fixed income. in periods of inflation, although there is greater employment there is also a tendency for prices to rise rapidly. Ī surplus budget may prove useful during the period of inflation. Ī surplus budget is used either to reduce government public debt or increase its savings. When the government spends less than the receipts the budget becomes surplus that is.Įstimated government receipts > anticipated government expenditure. Surplus budget – when estimated government receipts are more than the estimated government expenditure it is termed as surplus budget. this will increase employment and total demand for goods and services and encourage investment.Ģ. ![]() it can borrow money and spend it on public works. The government may come to the rescue of the people. for instance during the period of depression, when economic activities are at low level, resulting in unemployment. ![]() However, modern economists believe that the policy of balance budget may not always be suitable for the economy. a balanced budget was considered by them as neutral in its effects on the working of the economy and hence they are regarded it as the best. The concept of a balanced budget has been evocated by classical economists like Adam smith. The government must exercise financial discipline and should keep its expenditure within the available income. Well, it implies that the government raises funds in the means of taxes and other means a balanced budget was considered an effective check on extravagant expenditure of the government. government receipts and government expenditure. Balance budget – A government budget is said to be balanced when it is estimated revenues and anticipated expenditure are equal. According to the government, the budget is of three types:ġ. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |