Deficit spending occurs when government spending exceeds its revenue. Deficit spending often refers to intentional excess spending meant to stimulate the economy. British economist John Maynard Keynes is the most well-known proponent of deficit spending as a form of economic stimulus.
What is a budget deficit?
Many people use it as an indicator of the financial health of a country. It is a term more commonly used to refer to government spending and receipts rather than businesses or individuals. Budget deficits affect the national debt, the sum of annual budget deficits, and the cumulative total a country owes to creditors.
What happens if a budget deficit is not paid?
A budget deficit occurs when spending exceeds income. The term applies to governments, although individuals, companies, and other organizations can run deficits. A deficit must be paid. If it isn't, then it creates debt. Each year's deficit adds to the debt. As the debt grows, it increases the deficit in two ways. First, the must be paid each year.
