Deficit or Surplus

A deficit is a shortfall in a budget; in other words, the business, individual, or government in question has spent more than it has earned in a given period of time. The opposite of a deficit is a surplus, the sum left over when a business, individual, or government earns more than it spends in a given period of time.

Governments usually finance debt by issuing bonds. According to Keynesian economics, fiscal deficits can stimulate the economy when a country’s output is below its potential peak, but when the economy is near is potential level, deficits may cause inflation. Achieving a surplus normally means that a company has out-performed expectations.