ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Unlike the deficit, which drives the amount of money the government borrows in any single year, the debt is the cumulative amount of money the government has borrowed throughout our nation’s history. When the government runs a deficit, the debt increases; when the government runs a surplus, the debt shrinks.

Detailed explanation-2: -Governments and companies with surpluses have additional money that can be reinvested or used to pay off debts. The opposite of a surplus is a deficit, which occurs when spending exceeds revenues.

Detailed explanation-3: -The term government deficit implies increase in the debt of the government. In other words, if the government continues to borrow to finance deficit, it leads to additional debt.

Detailed explanation-4: -Issuing Debt With Bonds. Interest Rate Manipulation. Instituting Spending Cuts. Raising Taxes. Lowering Debt Successes. National Debt Bailout. Defaulting on National Debt.