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1. Deficit budget
If the proposed expenditure is greater than the planned revenue from taxation and miscellaneous
receipts, this is a budget deficit. The excess of expenditure over revenue will be met through
borrowing both internally through the sale of Treasury Bills and externally from other
organizations.
2. Balanced budget
If the proposed expenditure is equal to the planned revenue from taxation and other
miscellaneous receipts this is a balanced budget. Usually, balanced budgets are not presented for
unless the expenditure is very limited it would mean the government would have to over-tax the
population which can create disincentives. It is to avoid this that the tax revenue is
supplemented by borrowing.
3. Surplus budgets
If the proposed expenditure is less than the planned revenue from taxation and other
miscellaneous receipts, this is a surplus budget. Usually, surplus budgets are not presented for
they are deflationary and can create unemployment as the government takes out of the economy
more than its put back.
Wilfykil answered the question on February 6, 2019 at 12:17
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