馃攳
Budget Deficit | Definition | Calculation (Example) - YouTube
Channel: WallStreetMojo
[10]
hello everyone hi welcome to the channel
WallStreetmojo watch the video
[15]
till the end and also if you are new to
this channel and you can subscribe us by
[18]
clicking the bell ican today we have a
topic with us is the budget deficit no
[24]
you know every country you know have the
problem of budget deficits the sort of
[28]
at least India have one like an over
here the Oman state's budget deficit for
[33]
the first 7 months of 2018 plunge to
36.3% from a
[37]
year earlier to 1.65 billion rivals okay
we'll start with first and the foremost
[43]
thing over here will learn exactly what
is the budget deficit this is the first
[50]
question okay fine we'll begin see the
budget deficit is a deficit you know
[53]
when revenues they are less than the
expenses for a particular year or a
[59]
quarter so when we talk about this we
usually talk about the government budget
[66]
deficit and it means that the governess
has spent more than the amount that has
[72]
been collected okay so other than this
deficit there are two concepts that are
[77]
important in the case of the common
budget see when the government collects
[80]
more let's say more money than it sends
we call it as budget surplus okay
[91]
now this happens now when it is equal we
call it budget as balanced and this can
[99]
also happen in the case of the
individuals for the business so when
[102]
revenue exceeds when the revenue is
greater than the expenses we call it as
[109]
surplus and if then we can see that the
revenue and the expenses are equal we
[114]
call it as balance okay the next thing
we should learn on this as the formula
[119]
Part see budget deficit BDF that is a
budget deficit formula is equal to your
[123]
total expenditures by the government
less the total income of the government
[130]
so the total income of the government
includes all the like you know corporate
[134]
taxes personal taxes stamp duties okay
so on and so forth and the total
[142]
expenditure over here
[145]
expenditure includes the expense in the
defense energy well then we have signs
[154]
health care Social Security and so on
and so forth okay now let me make you do
[163]
some budget deficit calculation well
recently the US budget deficit you know
[171]
it climbed around $779 billion and
its highest since 2012 so let us
[176]
calculate the budget deficit of the
United States the total income breakup
[181]
you know of the same is like you know
there is individual income tax
[186]
individual income tax with understanding
at 1684 billion then there
[190]
is social security and other payroll tax
that is standing at 1171
[195]
billion then there is corporate taxes
which is standing at 205
[200]
billion and other taxes duties that is
standing at 270 billion so the total
[207]
income of us over here is 3 trillion
right that is three three zero so three
[213]
3,330 that's closely 3 trillion now the expenditures that is
[218]
you know for the defense which they did
665 million that is billion dollars
[223]
Social Security 998 million Medicare
that expenditure was 589 billion
[230]
interest on debt which they are paying
is 325 billion and some other
[235]
expenditures they which they did was 1542 so this is the total
[240]
expenditures this is our total income
now when we you deduct the budget
[245]
deficit formula if you just see that you
know the income is less than your
[250]
expenses that is you are shot by $789
billion so that is US budget
[256]
deficit so this is how you make the
calculation part right now won't you
[262]
make you understand that what are the
causes behind this deficits so what are
[267]
the factors that can cause the budget
deficits let's have a look at one-by-one
[271]
slow economic growth can be one thing
see
[276]
country's economy isn't going as fast as
the garbled is spending money the
[280]
country can experience slow economic
growth a slow economic growth that's
[287]
fine and you do the slow economic growth
due to the inflation or other economic
[290]
factors the government does not connect
as much money as it has planned so as a
[294]
result the government has to deal with
the thing called deficit right
[298]
second thing is called the high
government spending see if a government
[304]
has been investing a lot of money into
particular project then that would yield
[308]
a huge gains in the future then for the
current period it may create a what we
[312]
call as deficit right for the government
so this is good if the government has
[316]
spent the money on the sustainable
growth of the investment or an infra but
[321]
it's futile you know if the expense does
not ensure sustainable growth for the
[326]
expenses are incurred you know just to
support some unsustainable over it third
[330]
reason can be you know high unemployment
rate so if a country is expending
[337]
experiences a high unemployment rate
then maybe the government needs to pay
[341]
more subsidies towards the particular
purpose and all the efforts should be
[346]
given to improving the unemployment rate
so that you know the amount of the
[350]
subsidies can be reduced at the time of
the economic growth that has been
[354]
accelerated and then there are some of
the reason for the same as kind of
[357]
combination of all the above factors so
like the excessive government spending
[362]
may not happen due to one particular
reason and it may happen that you know
[365]
the particular combination of all the
factors become responsible for the
[369]
deficit in the country so the government
should make you know they have to keep
[372]
the expenses low and create more
revenues to gather more revenues now the
[375]
next thing is government budget deficit
is it bad well to answer this but know
[381]
over here you need to think that in the
government deficit is always bad no
[385]
actually the answer is no actually to
the investors any financial analyst
[389]
there are two important factors to
determine whether or not the government
[392]
office it is good for the country or not
the first factor is why government
[396]
expenditure is so high see is it because
the government has invested a particular
[400]
in infra or invested money in an
investment that will yield high returns
[404]
if that stick then the financial analyst
gives you know a green signal to the
[408]
government if not the analysts mark
them as a poor expended no the second
[413]
factor is the way that the deficit of
the national debt is impacting the
[418]
country so we call it national debt
because the government needs to borrow
[421]
money to pay for some of the things due
to the lack of revenue the third is
[426]
the effect of the deficit you know maybe
having a home or thing you know it may
[431]
be a having an hey walk on the country's
economic affairs so if the effect is
[434]
mine then the deficit is in a problem
and it's the wiser voice other case now
[439]
how to reduce the government budget
deficit see there are only two ways to
[449]
reduce the budget deficit okay
one is by increasing the revenues and
[454]
two is to reduce the spending it's quite
simple however the government over here
[459]
it's for the government it's it's quite
tricky one the two significant way to
[463]
increase the revenue for the government
is to increase the tax percentages you
[469]
can do that and to ensure economic
growth so if the common increases the
[472]
tax to merge it would affect the
economic growth and an economy cannot be
[475]
improved drastic not to reduce the
expenses the government needs to reduce
[478]
the expenditures reducing too much
expenses will affect the economy of the
[482]
country now since the government
spending is part of the country's GDP
[485]
too much reduction will you know slow
down the economic growth so the idea is
[490]
to understand the current state of
affairs and to decide what action can be
[494]
taken in regards to the common deficit I
hope you have got a great idea regarding
[499]
you know whether it is bad on you know
every time it's not bad sometimes and
[503]
there are some reasons we handed now
what exactly are causing the budget
[507]
deficit which we learned like slow
economic growth high government
[510]
spendings high unemployment rate and the
combo of the above we also tried and
[514]
understood the the example so I think
this is a rock-solid concept clearance
[518]
topic pan majority all the things have
been covered up so that's it for this
[523]
particular topic if you have learned and
enjoyed watching this video please like
[528]
and comment on this video and subscribe
to our channel for the latest updates
[531]
thank you everyone
Cheers
Most Recent Videos:
You can go back to the homepage right here: Homepage