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By the end of this section, you should be able to:
Every year, the government makes a plan. It decides:
This plan is called the government budget. Think of it like a household budget — your family plans how much to spend on food, rent, and electricity, and checks if their income covers it all.
The government budget is usually published once a year and shows the government's financial plans for the coming year.
To understand the budget, you need to know two key ideas:
The budget balance tells us whether the government is spending more or less than it earns. It is calculated like this:
Budget Balance = Government Revenue − Government Expenditure
The result tells us one of three things:
| Result | What it means |
|---|---|
| Revenue > Spending | Budget Surplus — government earns more than it spends |
| Revenue < Spending | Budget Deficit — government spends more than it earns |
| Revenue = Spending | Balanced Budget — government earns exactly what it spends |
A budget surplus happens when the government collects more money than it spends.
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