Types of Deficits or Surpluses
•Actual Deficit or Surplus
-Difference between government spending (G) and tax revenue (T) for a
fiscal year.
-If G > T, a deficit exists. If T > G, a surplus exists
-A deficit does not necessarily indicate that too much is being spent, since
tax
revenue changes automatically with the state of the
economy and the size of the economy (economic growth).
-A deficit can result from economic weakness (tax revenues fall with a weak
economy and entitlement spending like Unemployment Insurance rises)