ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A budget deficit occurs when money going out (spending) exceeds money coming in (revenue) during a defined period. In FY 2022, the federal government spent $6.27 trillion and collected $4.90 trillion in revenue, resulting in a deficit.

Detailed explanation-2: -Detailed Solution. National income doesn’t include interest on the unproductive national debt. National income defines the value of goods and services produced by any country in the period of a financial year.

Detailed explanation-3: -Deficit financing means generating funds to finance the deficit which results from an excess of expenditure over revenue. The gap is covered by borrowing from the public by the sale of bonds or by printing new money.

Detailed explanation-4: -The primary deficit adds to the national debt and the positive difference between the interest rate and the growth rate of GDP means that the interest payments alone cause the debt to rise faster than GDP.