.
Google

                       

Free US Law Dictionary

BETA

BROWSE TERMS: A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

FIND TERM:

Related Phrases

Deficit

Australia • British Virgin Islands
Canada • China • Colombia
France • Germany • Hong Kong
India • Indonesia • Ireland
Netherlands • New Zealand
Peru • Russia • Singapore
Tanzania • United Kingdom
United States • European Union

 v • d • e 

Tax rates around the world
Tax revenue as % of GDP

Economic policy Monetary policy
Central bank  ·   Money supply
Gold standard Fiscal policy
Spending  ·   Deficit  ·   Debt Policy-mix Trade policy
Tariff  ·   Trade agreement Finance Financial market
Financial market participants
Corporate  ·   Personal
Public  ·   Regulation Banking Fractional-reserve
Full-reserve  ·   Free banking
Islamic
 view • talk • edit • project

A budget deficit occurs when an entity (often a government) spends more money than it takes in. The opposite of a budget deficit is a budget surplus. Debt is essentially an accumulated flow of deficits. In other words, a deficit is a flow and debt is a stock.

An accumulated deficit over several years (or centuries) is referred to as the government debt. Government debt is usually financed by borrowing, although if a government's debt is denominated in its own currency it can print new currency to pay debts. Monetizing debts, however, can cause rapid inflation if done on a large scale. Governments can also sell assets to pay off debt. Most governments finance their debts by issuing long-term government bonds or shorter term notes and bills. Many governments use auctions to sell government bonds.

Governments usually must pay interest on what they have borrowed. Governments reduce debt when their revenues exceed their current expenditures and interest costs. Otherwise, government debt increases, requiring the issue of new government bonds or other means of financing debt, such as asset sales.

According to Keynesian economic theories, running a fiscal deficit and increasing government debt can stimulate economic activity when a country's output (GDP) is below its potential output. When an economy is running near or at its potential level of output, fiscal deficits can cause inflation.


is===1
Related Law Questions

Lawyers and Law Students! Can you improve this definition? Send us your improvements and we'll provide a link back to your website or blog.

Your Blog Subscriptions
Subscribe to blogs

10,000+ Law Job Listings
Lawyer . Police . Paralegal . Etc
Earn a law-related degree


Practice Area
Zip Code:

Contact a Lawyer Now!











is===1


1.4302 secs