Deficits and the National Debt

Multiple Choice

What is the difference between a budget deficit and a budget surplus?

• A budget deficit is when government spending exceeds tax revenues, while a budget surplus is when tax revenues exceed gov spending

• A budget deficit is when tax revenues exceed government spending, while a budget surplus is when government spending exceeds tax revenues.

• A budget deficit and a budget surplus both represent a situation where tax revenues exceed government spending

• A budget deficit and a surplus both represent a situation where gov spending exceeds tax revenues

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Multiple Choice

Which of the following will most likely occur if a government adopts an annually balanced budget rule that requires the government to eliminate any deficits or surpluses?

• Increased flexibility in responding to economic fluctuations and emergencies
• Higher government debt levels
• Reduced flexibility in responding to economic fluctuations and emergencies
• Decreased likelihood of budget deficits