Unit 7 Macroeconomics: Taxes, Fiscal, and Monetary Policies Chapters 15.3. Economics Mr. Biggs. Budget Deficits and the National Debt. Balancing the Budget When the federal government’s revenues equal its e xpenditures in any year, the federal government has a balanced budget.
Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.
Unit 7 Macroeconomics:
Taxes, Fiscal, and Monetary Policies
Balancing the Budget
When the federal government’s revenues equal its expenditures in any year, the federal government has a balanced budget.
Balanced budget - A budget in which revenues are equal to spending.
The federal budget is seldom balanced
and usually runs at adeficit.
Budget deficit - A situation in which the government spends more than it takes in.
Budget surplus - A situation in which the government takes in more than it spends.
The government could create new money
to pay for small deficits, but for large deficits,
it could lead to inflation or hyperinflation.
Hyperinflation - Very high inflation.
For example, post WWI Germany.
An alternative to creating money is to borrow money by issuing T-bills, T-notes, and T-bonds.
Wise borrowing can create more goods and public services but also has serious disadvantages.
For example, building airports and highways.