Deficit Spending Unit


DEFINITION of 'Deficit Spending Unit'

A economic term used to describe how an economy or economic unit within an economy has spent more than it has earned over a period of time. To raise the necessary funds to finance a deficit, the economic unit may sell debt (or equity if the entity is a corporation).

BREAKING DOWN 'Deficit Spending Unit'

During times of economic hardship, governments and municipalities are likely to run deficits to shield the effects of a recession and to spur economic growth. Although it is very unlikely that an economic unit will operate at a surplus all the time, a prolonged deficit will eventually cause long-term hardship for the economy as debt levels become too high.

  1. Deficit

    The amount by which a resource falls short of a mark, most often ...
  2. Surplus

    The amount of an asset or resource that exceeds the portion that ...
  3. Fiscal Policy

    Government spending policies that influence macroeconomic conditions. ...
  4. Deficit Hawk

    Slang for someone who wants the government to keep the federal ...
  5. Recession

    A significant decline in activity across the economy, lasting ...
  6. Macroeconomics

    The field of economics that studies the behavior of the aggregate ...
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