A government budget is an annual financial document outlining projected government revenues and outlays for the next fiscal year.
There are three types of budgets: balanced, surplus, and deficit, based on how accurate these projections are.
Balanced Budget: A balanced budget is one in which the anticipated revenue for a particular fiscal year is equal to the estimated spending for that year.
Balanced budgets are the greatest approach to maintain fiscal discipline and achieve a balanced economy, but they do not ensure financial stability in times of deflation or crisis.
Surplus Budget: If the anticipated government receipts for a certain fiscal year surpass the forecast government outlays, there will be a surplus budget.
This indicates that the government makes more money from taxes collected than it does from providing for the general welfare. This kind of budget shows how wealthy a nation is financially.
Deficit Budget: A government budget is considered to be in deficit if the projected outlays for that year's spending are greater than the anticipated revenues.
In this case, the government spends exorbitant amounts of money to raise the employment rate. As a result, there is a rise in the demand for products and services, which boosts the economy.