Structural Deficit Whenever Plan Changes In Government example essay topic

281 words
The money government spends on an investment projects, to pay salaries and wages and to provide social services, all come from the taxes which are paid individuals. When the taxes are collected it is determined by its annual budget. A budget is basically a plan. What government does is that it analyses its entire financial needs example, it would estimate how much students will be coming to BCC.

The BCC as an institution would determine its income and expenditure needs. This is then put into a formal statement and is sent to the ministry of education, then goes to the Ministry of finance. Here the total budget for that year is prepared. This includes: - 1. The amount of money you are able to get taxes alone. 2.

The projected expenditure. Budget Deficit This arises when government spending / expenditure exceeds the revenue from taxes. A Budget Surplus This arises when revenue collected from taxes exceeds government expenditure. A Structural Deficit Whenever plan changes in government spending does not equate with plan revenue. Collection is referred to as structural deficit. A Budget Deficit is extremely important to government for the following reason: 1.

Government needs money to run the country 2. The deficit can also impact on the social services 3. Deficits can have a negative impact on the individual in a country. 4. A deficit can have a negative macro economic on the individuals in a country e.g. increase in unemployment, inflation, decline in the G.D.P. It is for these reasons that government pays close attention to a Budget deficit.