What is Budget Deficit? Easy Explanation

Budget Deficit Explained

Governments usually spend money on various things such as social welfare programmes, military, infrastructure development and subsidies. But when the spending of the government exceeds the taxes that it collects from its people and businesses, then the budget deficit occurs. The government funds its excess spending by borrowing money. And the way the government borrows money is by selling government bonds. Higher the budget deficit, more money the government will have to borrow, which increases the debt burden of the country. The way governments can reduce its budget deficit is by either increasing the taxes on its people and businesses, or reducing its spending, or a combination of both.

#budgetdeficit #budgetdeficits #macroeconomics #economics #governmentspending #governmentdebt #fiscaldeficit #budget #governmentspending