Chapter 14 Outline |
I. BUDGET DEFICITS |
A. Definitions and General Comments |
| 1. A budget deficit occurs when government expenditures exceed government revenue over some relevant time span. |
| 2. A budget surplus occurs when government revenue exceeds government
expenditures over some relevant time span. |
| 3. Economists discuss two types of deficits: the structural deficit and the actual deficit. |
| a. The structural deficit is the deficit that would occur if the economy were
operating at full employment. |
| b. The actual deficit is the difference between the government's actual
revenue and expenditures. |
| 4. Economists are more concerned with the structural deficit. |
| a. The automatic increases in government expenditures and decreases in government revenue that occurs when the economy enters a recession
play a positive role in stabilizing the economy. |
| b. The structural deficit will remain even after the economy returns to full
employment. |