UK Accounting Glossary
A balanced budget is a budget in which income equals expenditures. In other words, if a country takes in X dollars in a year and spends exactly that amount, it has a balanced budget. The term ‘balanced budget’ usually applies to the U.S. federal government. For most of the past forty years, the United States has not maintained a balanced budget but rather ran a deficit. The exception to this occurred during the tail end of the dot-com boom during which the U.S. federal government not only maintained a balanced budget but ran a surplus. Classical economists tend to argue that a balanced budget should be the aim of the government. Keynesians argue, however, that the government should forgo the goal of a balanced budget during difficult economic times and instead attempt to stimulate the economy through deficit spending.
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This glossary post was last updated: 4th February 2020.