What Does A Deficit Mean?

The dictionary definition of the word 'deficit' is the property of being an amount by which something is less than expected or required. A deficit most commonly refers to a budget deficit which arises when a Government ends up spending much more than it is earning or taking in. The opposite of a budget deficit is a budget surplus. The word deficit originally comes from the Latin word 'deficere' which means 'it is wanting'.

A government's deficit can be measured with or without the interest that it will have to pay back on top of its original debt. A primary deficit is defined as the difference between current government spending programs and their total current revenue from all types of taxes i.e. Their income. The total deficit (which is more commonly referred to as 'the deficit') is spending, plus all the interest payments on top of the original debt, minus the total tax revenue.

A government deficit can be thought of as being split into two parts: Structural and cyclical. The economy is a lot like a cycle. At the lowest point of this cycle, there are high levels of unemployment, which means that tax revenue is low and Government expenditure on social security is high. On the other high side of the cycle, unemployment is low which means that tax revenue is high and spending on social security is low. The additional money that needs to be borrowed at the low point of the cycle is the cyclical deficit.

A structural deficit remains present across the whole business cycle because the Government's spending is too high for the current prevailing tax levels.

In monetary terms, the word deficit can also mean a business loss. When the term is applied to education, deficit refers to the failure to achieve the passing grade into the next class or level.

Deficits or a deficit commonly refers to budget deficits which crop up when an entity (usually a government) ends up spending more money than it actually takes in. The opposite of a budget deficit is a budget surplus. In general it is an inadequacy or insufficiency; a deficiency. It could be impairment or a deficiency in a mental or physical function. A deficit also means a condition or position that is unfavourable; or a disadvantage.

In monetary terms it also means a business loss; or the difference by an aggregate of money is less than the required or the expected sum total.

The term deficit is also applied to education where it means failure to make the passing grade in any particular course. The noun deficit has its roots in the French word déficit, which comes from Latin 'deficit' meaning 'it is wanting', coming from deficere.

Deficit is more money out less money in.