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A balanced budget can be regarded as neutral. It has been called an 'orthodox' budget,
reflecting the Treasury view of sound finance.
A deficit budget is expansionary as more money is pumped into the economy than is withdrawn in taxation. The borrowing that this policy requires is likely to have an inflationary effect in some circumstances. During the Great Depression of the 1930s, governments sought to stimulate economic activity by means of deficit budgets.
A surplus budget is deflationary insofar as the government takes out more than it puts into the money flow. Which type of budget a Minister of Finance will present will depend on the government's assessment of the economic situation and the overall economic, social and political policy, it seeks to pursue.
skilled writter answered the question on May 3, 2018 at 17:25
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