What is a budget surplus and how does it impact the economy?

A budget surplus occurs when a government’s revenues exceed its expenditures over a specific period. This surplus can be used to pay down public debt, fund future projects, or save for economic downturns. A surplus is generally seen as a positive sign of fiscal responsibility, as it indicates that a government is not relying on borrowing to finance its operations. However, if a surplus persists for a long period, it may also indicate that the government is not investing enough in infrastructure, social programs, or other areas that could stimulate economic growth. A budget surplus helps promote long-term economic stability.