Definition
A surplus means receipts are greater than outlays during a fiscal period.
Political Dictionary
Budget Surplus
A budget surplus occurs when government revenue exceeds spending.
Why It Matters
Surpluses can reduce borrowing, retire debt, or provide room for future spending or tax changes.
How It Works
Government records total revenue and outlays and reports a surplus when the balance is positive.
History
Federal surpluses have been relatively uncommon in recent decades.
Example
A government collecting more in taxes than it spends may use the difference to reduce debt.
Common Misconceptions
- A surplus means government has no debt.
- Every surplus is economically beneficial.
- Surpluses automatically continue in later years.
Related Terms
- Fiscal Policy
- Monetary Policy
- Inflation
- Economic Growth
- Government Spending
Related Topics
See Also