Budget deficits occur when a government spends more money than it collects in revenue during a specific period, usually a fiscal year. This leads to an increase in the national debt.
Related terms
National Debt: The total amount of money that a government owes to its creditors due to accumulated budget deficits over time.
Fiscal Policy: Government decisions regarding taxation and spending that aim to influence the economy.
Balanced Budget: When government spending equals government revenue, resulting in no budget deficit or surplus.