Deficit refers to a situation where the amount spent or owed is more than the amount earned or received. In finance, it is commonly used to refer to a government’s budget deficit, which occurs when the government’s spending exceeds its revenue in a given period. A budget deficit can be financed through borrowing, and if it becomes chronic, it can lead to high levels of public debt and fiscal instability. Deficit can also refer to trade deficit, which is when a country’s imports exceed its exports, resulting in a negative balance of trade.