Types of Budget
A government budget is an estimate of government revenue and expenditure for the coming year.
a) Balanced Budget
• A balanced budget is one where estimated government revenue covers the estimated expenditure.
• It is a destabiliser as it aggravates inflation and deflation.
b) Unbalanced Budget
Surplus budget govt revenue > govt expenditure
• It has disinflationary effect as it reduces purchasing power and aggregate demand
Deficit budget govt revenue < govt expenditure
• It increases purchasing power and aggregate demand
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