Deficit Budget:
1. When the government revenue is less than government expenditure, it is called a Deficit Budget.
2. Deficit Budget would lead to increase in aggregate demand.
3. Deficit Budget leads to flow of money from the government to the economy.
4. It is suitable for government when the economy suffers from depression.
5. The policy of deficit budget would lead to increase in employment, investment, etc.
Balanced Budget:
1. When the government revenue is equal to government expenditure, it is called a Balanced Budget.
2. Balanced Budget would not affect the aggregate demand in the economy.
3. The flow revenue of the government is equal to meet the expenditure of the government.
4. It is not possible to introduce a balanced budget under present circumstances.
5. The balanced budget policy is called “Sound Finance” where the government performs only minimum functions.
