deficit definition economics

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Budget deficit refers to the situation where a government's spending exceeds its revenues. Fiscal deficit, a closely related concept, refers to the government's total expenditures exceeding its total receipts, excluding borrowings. Cyclical deficit occurs due to fluctuations in economic activity, and it may widen during recessions. Calculation of budget deficit involves subtracting government revenues from total expenditures. A higher budget deficit can indicate fiscal stress and potential debt accumulation.

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