What Is a Budget Deficit? Deficit Causes & Solutions - Deepstash

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What Is a Budget Deficit? Deficit Causes & Solutions

What Is a Budget Deficit? Deficit Causes & Solutions

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Defining Budget Deficits

When you spend more than you earn and the total amount of money that you're spending turns out to be more than the amount that you're brining in causes a budget deficit.

For example, if you spend $100 per week but earn less than that every week, that's a budget deficit. In addition, sh...

The Causes of a Budget Deficit

The main cause of a budget deficit is: spending more than what you're making!

However, when it comes to large scale-spending, like how the government spends, it can be difficult to track due to low taxes and high spending.

Causes of Governmental Budget Deficits

  • Tax cuts (these decrease revenue)
  • Low Gross Domestic Product (GDP - the money that's being made in the country; it means that we're not making enough money domestically)
  • Poorly-designed tax structures that under-tax high-earn...

Reducing Budget Deficits with Governments

In order to reduce the budget deficits that's happening with the government, they can do the following:

  • Increase the taxes, particularly on the wealthy, as advocated by a large group in order to increase federal revenue therefore offsetting the deficit.
  • Stimulate economic growt...

Guarding Against Budget Deficits

  • Keep tabs on how much money you earn each month. It's important to know how much you make so that you'll be able to plan out your expenses.
  • Make a checklist of your monthly expenses, down to the penny; and
  • Allocate budgets to spend for certain matters that match your income.

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