What's it: A cyclical budget deficit is when government spending exceeds government revenue, and it occurs due to economic conditions. In other words, the deficit occurs due to the ongoing economic cycle. For example, it increases during a
Government Budget
Government Discretionary Spending: What Is It? What are some examples?
What's it: Government discretionary spending is an item in government spending where the allocation is at the government's discretion and is implemented through an appropriation bill. The government decides what to spend in the next fiscal year
Government Revenue: Types and Why Does It Matter?
What's it: Government revenue is money earned by the government for carrying out its activities. Taxes are the main source. In addition, the government also derives its revenue from non-tax sources such as contributions from state-owned
Government Capital Expenditures: Examples, Why It Matters
What's it: Government capital expenditure refers to spending to create long-term assets in the economy. An example is money spent on building infrastructures such as roads, railways, and ports. Unlike government current expenditures, they
Government Current Expenditure: Example, Calculation in GDP
What's it: Government current expenditures represent spending on day-to-day operations, including administrative activities and public services. An example is the expenditure of goods and services for the activities of government offices or to
Transfer Payments: Importance, Types, and Criticism
What's it: Transfer payments are payments by the government to the private sector without having to pay for the goods and services provided. These payments do not involve the goods and services exchanged and, therefore, are not counted
National Debt: What is it and What Are the Implications?
What's it: National debt is money owed by the government to its creditors. The government owes money to cover the budget deficit, where revenues are less than expenditures. And the higher the deficit, the bigger the debt. Sometimes, we call
Discretionary Fiscal Policy: How it Works, Types, Effects
What's it: Discretionary fiscal policy is a deliberate government policy to influence the economy by changing its spending and income. It is deliberate because the government intends to change items in its budget or revenue to direct the economy
Induced Tax: Examples, How they Work, Effects on the Economy
What's it: An induced tax is a tax in which the rate increases and decreases depending on the taxpayer's ability. So, when our income or wealth rises, we have to bear high rates. Conversely, a decrease in income leaves us with a lower tax bill.