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Budget deficit is when a government spends more than it receives in tax receipts, leading to borrowing to cover the shortfall, impacting the economy and accumulating national debt.
Budget deficit refers to the situation when a government spends more money than it receives in tax receipts over a specified period, leading to the need to borrow funds to cover the shortfall. This deficit is a crucial aspect of a country's fiscal policy and can impact economic conditions.
For example, if a government's expenditure exceeds its revenue due to increased spending on public services or infrastructure development, it results in a budget deficit. To finance this gap, the government may issue bonds or borrow money from various sources, accumulating debt over time.
The accumulated deficits contribute to the national debt, highlighting the importance of balancing the budget to maintain financial stability and long-term economic health.
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