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🧵The #fiscalconservativemyths around good government being dependent on #balancedbudgets and ridiculous comparisons of government budgets to household budgets is about to arise yet again. Let's check these myths out.
Do economists believe that the budget should be balanced each fiscal year? No, a budget should be balanced only on average; it can be in a deficit during a recession and offset by surpluses when the economy is doing well.
A balanced budget refers to total budget expenditure being equal to the total budget receipts. Adam Smith and other classical economists advocated the concept of balanced budget. They claimed a balanced budget is the best since it has a neutral effect on the economy.
