Types of Budgets

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  2276_types of budget.png govt revenue > govt expenditure

It has disinflationary effect as it reduces purchasing power and aggregate demand

Deficit budget  2276_types of budget.png govt revenue < govt expenditure

It increases purchasing power and aggregate demand

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