Government deficit and national debt

budget deficit

• when a government's spending on goods, services, and transfer payments equals its tax revenues

• when a government spends less on goods, services, and transfer payments than it collects in tax revenues;

• the accumulated amount of money that a government owes to its creditors as the result of running budget deficits

• when a government spends more on goods, services, and transfer payments than it collects in tax revenues

national debt

• Government spending is more than the revenue they get .

• the total amount of money that the government of a country owes to companies or other countries .

• when government earn and get revenue more than it spends .

if a country takes in $700 dollar, in tax revenue, spends $600 dollar, on goods and services and $200 dollar, in transfer payments

The saving by the government is ?

• $600

• $700

• -$100

• $200

Answer explanation

Note that the savings here are negative. National savings can be positive, which would mean the government has money that it could loan out. However, negative national savings means that the government is borrowing

If the total of government spending plus government transfer payments is less than tax revenues, which of the following must be true?

• The government budget is in surplus.

• The national debt will increase.

• There is a recessionary gap.

Budget Surplus?

• when the Government budget (spending) is greater than the amount of revenue collected by the Government (taxes).

• when a government's spending on goods, services, and transfer payments equals its tax revenues

• occurs when the government’s earning through tax revenues is more than its spending in the current quarter or year

• the accumulated amount of money that a government owes to its creditors as the result of running budget deficits

How to cure deficit budget ?

• The government will generate more tax revenue without raising taxes .

• less tax

• less economic activity

A budget deficit can lead to

• higher levels of borrowing

• higher interest payments

• low reinvestment

• All correct