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TERM OF THE DAY

Fiscal Deficit A fiscal deficit occurs when a government's total expenditures exceed the revenue that it generates, excluding money from borrowings. Deficit differs from debt, which is an accumulation of yearly deficits. A fiscal deficit is regarded by some as a positive economic event. For example, economist John Maynard Keynes believed that deficits help countries climb out of economic recession. On the other hand, fiscal conservatives feel that governments should avoid deficits in favor of a balanced budget policy.

Breaking it Down: Fiscal deficits have been occurring since the founding of the United States. As the secretary of the Treasury in the 1790s, Alexander Hamilton proposed that.. Read More