Government spending serves multiple purposes, including stimulating economic growth, providing social welfare programs, regulating the economy, and maintaining national security.

Discretionary spending refers to government spending that is not mandated by law and can be adjusted annually through the budget process. Defense spending is an example of discretionary spending.

A budget deficit occurs when government spending exceeds government revenue, resulting in a negative budget balance.

A budget deficit typically leads to an increase in the national debt, higher interest rates, and reduced economic growth. It does not directly lead to lower inflation.

A budget surplus occurs when government revenue exceeds government spending, resulting in a positive budget balance.

A budget surplus typically leads to a reduction in the national debt, lower interest rates, and increased economic growth. It does not directly lead to higher inflation.

Fiscal policy aims to achieve multiple goals, including stabilizing the economy, promoting economic growth, controlling inflation, and reducing unemployment.

Expansionary fiscal policy involves increasing government spending or cutting taxes to boost economic activity.

Contractionary fiscal policy involves decreasing government spending or raising taxes to reduce economic activity.

Fiscal balance occurs when the government's budget is balanced, with revenue equaling spending.

A fiscal balance typically leads to stable economic growth, low inflation, and reduced national debt. It does not directly lead to increased unemployment.

Fiscal policy is the primary tool used by the government to influence the economy through changes in government spending and taxation.

Government spending typically leads to increased economic growth, reduced unemployment, and higher inflation. It does not directly lead to lower interest rates.

Budget balance refers to the difference between government revenue and government spending.

A budget surplus typically leads to a reduction in the national debt, lower interest rates, and increased economic growth. It does not directly lead to higher inflation.