Deficit
The total amount by which money spent is more than money received [Cambridge Dictionary].
In financial terms, a deficit occurs when expenses exceed revenues, imports exceed exports, or liabilities exceed assets. A deficit is synonymous with a shortfall or loss and is the opposite of a surplus. A deficit can occur when a government, company, or person spends more than it receives in a given period, usually a year. Whether the situation is personal, corporate, or governmental, running a deficit will reduce any current surplus or add to any existing debt load. Deficits are not always unintentional or the sign of a government or business in financial trouble. Businesses may deliberately run budget deficits to maximize future earnings opportunities—such as retaining employees during slow months to ensure an adequate workforce in busier times. Also, some governments run deficits to finance large public projects or maintain programs for their citizens. During a recession, a government may intentionally run a deficit by decreasing its revenue sources, such as taxes, while maintaining or even increasing expenditures—on infrastructure, for example—to provide jobs and income. The theory is that these measures will boost the public’s purchasing power and ultimately stimulate the economy [Investopedia].
The deficit is of the most common terms in all of macro-finance. Also, this is the most politically relevant, inspiring legislation and executive decisions that affect many people. Although people often use these words interchangeably, they are inherently different, and the magnitude of each doesn’t necessarily have anything to do with the other. But it does have plenty to do with people's situations, the health of corporations, and the underlying economy [Investopedia].
Deficit. (2023). Cambridge Dictionary. Retrieved from: https://dictionary.cambridge.org/dictionary/english/deficit
Tardi, K. (2020). What Are Deficits? Definition, Types, Risks, and Benefits. Investopedia. Retrieved from: https://www.investopedia.com/terms/d/deficit.asp
Mcfarlane, G. (2022). Debt vs. Deficit: What's the Difference? Investopedia. Retrieved from: https://www.investopedia.com/articles/personal-finance/081315/debt-vs-deficit-understanding-differences.asp