ECONOMICS
FISCAL POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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There is an inverse relationship between deficit and debt.
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Budget deficits added together equal the national debt.
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Debt plus deficits equal the governments budget.
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Debt minus deficit equals government surplus.
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Detailed explanation-1: -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.
Detailed explanation-2: -What is the difference between the federal budget deficit and the national debt? The budget deficit is the amount by which expenditures exceed revenues in a particular year, while the national debt is the cumulative effect of all past budget deficits and surpluses.
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: -Debt is any money that is owed to someone else while the term deficit refers to a situation where expenses exceed revenues or liabilities exceed assets. Put simply, debt is the accumulation of years of deficit and the occasional surplus.