Question

The hernandez family budgets $420 a month for food. last month they spent $413, which creates a?

Answer 1

A budget surplus of $7

What is a budget surplus's opposite?

A budget deficit is the polar opposite of a budget surplus. If a company (or government) has a budget deficit, it signifies that over the given timeframe, it spent more money than it brought in. A business's budget deficit could necessitate a budget reform for the upcoming fiscal year, even though a budget deficit for the government is not always negative for spending.

What does the term "surplus" mean?

A surplus is a sign that the government is being run efficiently. When government income is higher than government expenditures for a specific time period, typically a fiscal year, there is a surplus, which is a positive number.

How is inflation caused by a budget surplus?

Nevertheless, inflationary pressures can also exist when the economy is struggling. In essence, a rise in the money supply is what causes inflation. In light of the foregoing, a budget surplus will drain funds from the economy, hence lowering the money supply and fostering a deflationary environment.

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