The government budget is the document/report of proposals that contains the details of expected government expenditure and how the government is expected to collect revenue to meet expenditure for the next year that is presented to the council and approved by it.
Budget can be classified as,
Deficit budget
Surplus budget
Balanced budget
Expansionary Loans
If the loans that are obtained to settle budget deficit increases the money supply in the country, such loans are known as expansionary loans.
Expansionary loans:
Government obtaining loans from the Central Bank
Obtaining loans from the Commercial Banks
Obtaining foreign loans
Contractible Loans
If the loans taken do not affect the supply of money in the economy, they are known as contractible loans.
Contractible loans:
Obtaining loans from non-banking institutions
Taking loans from the general public
Contractible budget policies are more fovourable for an economy than expansionary budget policies.
