What is a "budget deficit"?

A "budget deficit" occurs when an entity, such as a government, organization, or individual, spends more money than it brings in during a given time period. This financial imbalance indicates that expenditures exceed revenues, leading to a shortfall that must be addressed, often through borrowing, reduction of expenses, or increasing revenue streams in future periods. Understanding a budget deficit is crucial for financial management, as it can affect credit ratings, future borrowing capacity, and overall financial health.

The other options describe different financial situations. Matching income and expenses signifies a balanced budget, while a surplus indicates that revenues exceed expenses. Accumulated debt refers to the total liabilities a government has incurred, rather than the ongoing financial imbalance represented by a budget deficit. Understanding these distinctions helps clarify the concept of a budget deficit and its implications for financial planning.