myz-vgb.ru A Business Encyclopedia

Budget Deficit

Definition: The Budget Deficit is the financial situation wherein the expenditures exceed the revenues. The Budget Deficit generally relates to the government’s expenditure and not the business or individual’s spending.

The government’s collective deficits are termed as “National Debt”. In the case of a budget deficit, be it the Government or any business, it has to resort to the external borrowings in order to escape the bankruptcy. The Investors or analyst study the budget deficit of the country or business to judge its financial health.

There can be different types of budget deficits that can be classified on the basis of types of receipts and expenditures taken into the consideration. These are:

Budget Deficit-1

  1. Revenue Deficit
  2. Fiscal Deficit
  3. Primary Deficit
  4. Monetised Deficit

The Budget surplus is opposite of budget deficit where the revenues exceed the expenditures, and when the spending is equal to the revenues, the budget is said to be balanced. The major implications of a Government budget deficit are:

  • Slower economic growth
  • Increased tax revenue
  • High unemployment rates
  • High Government spending
  • Investors expect high inflation rates due to which the real value of debt reduces and thus, the investors expect higher interest rates for their future loans to the government.

Ideally, for any investor the budget deficits are a threat, but he must understand the reasons behind such a deficit. The reason for such a deficit could be the investments made in the infrastructure development or any other profitable investments that will yield profits in the future, could be seen as healthier than the situation, where a country or a business entity is facing a deficit due to unsustainable expenses.

Leave a Reply

Your email address will not be published. Required fields are marked *

Shares

Related pages


valence theory of motivationconglomerate diversification strategydialectic definition and examplesassumptions of capm modelprogram evaluation review technique pertautocratic management definitionbureaucratic organization structurelines intersect at right angleshow to calculate markup in accountingmaximization and minimization problems in linear programmingdefine oligopoly marketvroom theory of expectancywhat is operant conditionrationing in economicsunitary elastic demand exampledefine geocentric theorydefinition liquidatebrandmark definitionmeaning of diagonal communicationnpv meaningsunk cost meaningwhistle blowing definitionwhat is trait theory of personalityethnocentrism is defined aswhat is retained incomesnowball samplingreferant powerstraddle strategy exampledebenture shares definitionprovident fund interestbuy out definitionwhat is the definition of hrmitr returnfixed asset turnover ratio industry averagecognitive learning process theoryguerrilla war definitiondecentralised structure definitionarbitrage forexweber theory of bureaucracyfactors affecting elasticity of demandmoratorium period meaning in loanmeaning of neoclassicalforex meaningsegmentation bases definitiondefine inbound logistics in the value chainwhat is finance lease and operating leasereinforcement theory in managementherzberg's theory of motivationivan pavlov and classical conditioningmultistage cluster sampling definitionnational pension system npsanti takeover measureswhat is contribution in marginal costingstratified sampling definitiongovt budget deficitcheque truncation systemomo marketingpath goal theory by robert housescatter diagramconsumer purchase decision definitionmeaning of normal profitmeaning of vestibuleunemployed defcrr in bankthe carrot and the stick theorydefine snowballguerilla tactics definitionadvantages of laissez faire leadershipretrenchment strategy in strategic managementdemat accountpavlov theory of classical conditioningpersuade meaning in tagalogwholesaler definition marketingcapital asset ratio formulavestibule defjohari windoeinnovation schumpeterentrepreneurial ventures definition