OMTEX CLASSES: A deficit budget may prove useful during the period of depression.

A deficit budget may prove useful during the period of depression.

A deficit budget may prove useful during the period of depression.

Deficit budget – when estimate government receipts are less than the government expenditure. In modern economies, most of the budget are of this nature . that the estimate government receipts < anticipated government expenditure.

A deficit budget increases the liability of the government or decreases its reserves.

A deficit  budget may prove useful during the period of depression , economics activities are at a low level . it results in unemployment , business loss and even bankruptcy and inflation etc. the government can borrow money and increase the expenditure on public works through deficit financing . this will increase employment and total effective demand for the goods and also the services which would then encourage investment . thus, a deficit budget is useful for removing depression and unemployment.

Any country in the world is aiming to avoid deficit budget although the  surplus budget is difficult for a country to achieve and that is the reason countries strive for a balanced budget in order to avoid inflation, unemployment , loss or another consequence .

This is all about the types of government budget which are subdivided into 3 that a person should know.