What are the effects of a surplus?
Surplus causes a market disequilibrium in the supply and demand of a product.
This imbalance means that the product cannot efficiently flow through the market.
Fortunately, the cycle of surplus and shortage has a way of balancing itself out..
Is a budget surplus a good thing?
A budget surplus occurs when government tax receipts are greater than government spending. It means the government can either save money or pay off existing national debt. … It also gives the government more room for manoeuvre in a future recession, where government borrowing tends to rise.
What is an example of a surplus?
The definition of surplus is something that is in excess of what you need. An example of surplus goods are items you do not need and have no use for. An example of surplus cash is money left over after you have paid all of your bills.
Why is a budget surplus not necessarily a good thing?
Why is a budget surplus not necessarily a good thing? It means tax rates may be too high. Why does the federal debt tend to increase during periods of recession? Economic activity decreases, which decreases revenues and increases outlays.