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Economics

Methods of Financing Deficits and Use of a Surplus

Budget deficits occur when government spending exceeds taxation. This must be financed through borrowing from the domestic private sector of from overseas.

Budget surpluses occur when taxation exceeds government spending. This can be used to pay off existing government debt or create investment funds for future expenditure.

Watch the video to learn more about the methods of financing deficits and uses of a surplus in HSC Economics: