Budget balance
Definition. The budget balance is the difference between total government revenue and total government spending over a period, usually a fiscal year. A budget surplus arises when revenue exceeds spending, a budget deficit when spending exceeds revenue, and a balanced budget when the two are equal.
A deficit injects net demand into the economy and is often financed by borrowing, while a surplus withdraws demand. Singapore is constitutionally required to maintain a balanced budget over each term of government.
This term belongs to Fiscal Policy in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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