Budgetary Surplus or Deficit

Budgetary Surplus or Deficit - government intends to spend...

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Budgetary Surplus or Deficit: If the current or revenue account receipts are exactly equal to proposed expenditure , then the budget is said to balanced . If the revenue receipts fall short of the proposed expenditure then it is a case of a deficit budget . On the other hand if revenue receipts exceed the proposed expenditure then it is called Surplus budget . In order to avoid public intervention in economic activities the classical economists used to favor balanced budgets i.e. when the government expenditure is exactly equal to the tax revenues. In case of a deficit budget , the government expenditure has exceeded receipts. Therefore, the
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Unformatted text preview: government intends to spend more and increase the size of the aggregate or effective demand. This can be done by raising fresh debts to finance extra expenditure. Alternatively, the tax rates can also be reduced in order to enable people to spend more. The case of surplus budget is exactly the opposite. Here, public revenue exceeds public expenditure. It then becomes possible for the government to repay some debt burden . It is also possible to raise tax rates and to withdraw some purchasing power from circulation....
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