Unit III (Deficits, Surpluses, and Debt)

• Balanced Budget:
  -Revenues = Expenditures
• Budget Deficit:
  -Revenues < Expenditures
• Budget Surplus:
  -Revenues > Expenditures
• Government Debt:
  -Sum of all deficits - Sum of all Surpluses
• Government must borrow money when it runs a budget deficit. They borrow from:
  -Individuals
  -Corporations
  -Financial Institutions
  -Foreign Entities or Foreign Governments

• Fiscal Policy (Two Options):

• Discretionary Fiscal Policy (action)

-Expansionary fiscal policy - think deficit

• Contractionary fiscal policy - think surplus

-Non - Discretionary Fiscal Policy (no action)