ECONOMICS
FISCAL POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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It helps it, making the deficit go up
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It helps it, making the deficit go down
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It hurts it, making the deficit go up
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It hurts it, making the deficit go down
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Detailed explanation-1: -What is the Difference Between the Federal Budget Deficit and the Federal Government Debt? A federal budget deficit occurs when government spending outpaces revenue or the income drawn from taxes, fees, and investments. Deficits add to the national debt or federal government debt.
Detailed explanation-2: -When the government runs a deficit, the debt increases; when the government runs a surplus, the debt shrinks. Three measures of the debt are: Debt held by the public measures the government’s borrowing from the private sector (including banks and investors) and foreign governments.
Detailed explanation-3: -How is the national debt affected by the national budget? The debt increases every year that there is a budget deficit. Officials argue that the government needs to reduce the national debt.
Detailed explanation-4: -Fiscal Deficit Impact on the Economy Others argue that budget deficits crowd out private borrowing, manipulate capital structures and interest rates, decrease net exports, and lead to either higher taxes, higher inflation or both.
Detailed explanation-5: -The debt is the total amount of money the U.S. government owes. It represents the accumulation of past deficits, minus surpluses. Debt is like the balance on your credit card statement, which shows the total amount you have accrued over time.