budget constraint

Definitions (3)

1. For an individual or household, the condition that income equals expenditure (in a static model), or that income minus expenditure equals the value of increased asset holdings (in a dynamic model).
2. For a country, the condition that the value of exports equals the value of imports or, if capital flows are permitted, that exports minus imports equals the net capital outflow. It is equivalent to income from production equaling expenditure on goods plus net acquisition of foreign assets.
3. The curve, usually a straight line, representing either of these conditions.

Use budget constraint in a sentence

You may want to make sure that you are aware of any budget constraint and how to adapt to it.

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There was a budget constraint that was preventing us from our next course of action, so we decided to try and lift the constraint.

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As with any business or home, a budget constraint can decrease the amount of money that can be spent on luxuries, because the money earned is generally close in value to that being spent.

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