Distinguish between Balanced budget and Surplus budget.
or
What is a balanced government budget? 

Recall, a budget is defined as an annual statement of the estimated receipts and expenditure of the government over the fiscal year. Budgets are of three types —balanced, surplus and deficit depending upon whether the estimated expenditure is equal to, more than or less than estimated receipts respectively. It is explained below.
(i) Balanced Budget. A government budget is said to be a balanced budget in which government estimated receipts (revenue and capital) are shown equal to government estimated expenditure. Let us suppose for the sake of convenience that the only source of revenue is a lump sum tax. A balanced budget will then imply that the amount of tax is equal to the amount of expenditure. Symbolically:
Balanced Budget
Estimated Govt. Receipts = Estimated Govt. Expenditure
Two main merits of a balanced budget are: (i) It ensures financial stability, and (ii) It avoids wasteful expenditure. Two main demerits are: (i) Process of economic growth is hindered, and (ii) Scope of undertaking welfare activities is restricted.
According to Adam Smith, public expenditure should never exceed public revenues, i.e., he advocated a balanced budget. But Keynes and modern economists are not agreed with the policy of a balanced budget. They argue that in a balanced budget, total expenditure (public and private) falls short of the amount necessary to maintain full employment. Therefore, government should increase its expenditure to close the gap between the expenditure essential for full employment and expenditure that actually takes place. Ideally a balanced budget is a good policy to bring the near full employment economy to a full employment equilibrium.
Unbalanced Budget. When government estimated expenditure is either more or less than government estimated receipts, the budget is said to be an unbalanced budget. It may either be surplus budget or deficit budget.
(ii) Surplus Budget. When government estimated receipts are more than government estimated expenditure in the budget, the budget is called a surplus budget. In other words, a surplus budget implies a situation wherein government revenue is in excess of government expenditure.
Symbolically:
Surplus Budget
Estimated Govt. Receipts > Estimated Govt. Expenditure
A surplus budget shows that government is taking away more money than what it is pumping in the economic system. As a result aggregate demand tends to fall which helps in reducing price level. Therefore, in times of severe inflation which arises due to excess demand, a surplus budget is the appropriate budget. But in a situation of deflation and recession, surplus budget should be avoided.