What defines a government budget deficit?

A government budget deficit is defined as a situation where the government's expenditures exceed its revenues within a given period, typically a fiscal year. This scenario occurs when the total amount spent on government programs, services, and debt obligations surpasses the income collected from taxes and other sources.

Understanding this definition is crucial as it highlights the imbalance between what the government receives and what it spends. When a deficit occurs, the government may need to borrow money to finance the gap, which can lead to an increase in public debt over time. This fiscal situation can have various implications for the economy, including potential impacts on interest rates, inflation, and overall economic growth.

In contrast, when revenues exceed expenditures, the government runs a budget surplus, which allows for saving or spending on future initiatives. Government borrowing from private sectors relates to the financing of deficits but does not directly define what a budget deficit is. Lastly, a surplus from government savings implies a financially healthy situation where the government has more income than expenses, which is the opposite of a budget deficit.