Tuesday, May 19, 2009


When the government spends more than it collects in
revenues, the government has a budget deficit. Deficits
generally stimulate the economy. However, excessive
stimulation can lead to demand in excess of resource supplies,
resulting in inflation. They also add to the national debt.

When the government collects more than it spends, the
government has a budget surplus. Surpluses generally
dampen the economy and are politically unpopular.

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