Deficits & National Debt Quiz

What is the difference between a deficit and debt?

• A deficit is the accumulation of debts.

• A deficit is when the government spends more than its tax revenue in a given year.

• Debt is when the government spends more than its tax revenue in a given year.

• Debt is the total amount of money saved by the government.

How is the national debt of Cliffordonia calculated at the end of its second year?

• $900 by adding tax revenues.

• $700 by subtracting tax revenue from spending.

• $100 as it's the first year's deficit.

• $300 by adding yearly deficits.

Why should debt be looked at as a percent of GDP?

• Because it shows the government's ability to wear smaller clothes.

• Because it reflects the country's ability to pay off its debt relative to its income.

• Because it directly correlates with the country's military spending.

• Because it indicates the amount of money available for healthcare.

Which countries have a higher debt-to-GDP ratio than the US?

• Only countries without a space program.

• Japan and France, among others.

• Only developing countries.

• Only Greece and Italy.

What is the main concern of economists regarding US debt?

• The current level of tax revenue.

• The future borrowing the US is going to do.

• The amount of money lent to businesses.

• The borrowing already done.

What are the two largest expenditures of the US government?

• Defense and infrastructure.

• Education and defense.

• Social Security and healthcare programs.

• Healthcare and military operations overseas.

What could potentially limit the amount of money the government can borrow?

• The country's military strength.

• The number of available lenders.

• The size of the government's printing presses.

• The number of tax auditors.

What is the 'debt ceiling'?

• The maximum height of the US Capitol building.

• A theoretical limit on government spending.

• The highest interest rate lenders can charge.

• A cap on how much debt the US Treasury can issue.

Why do American and foreign lenders charge the US government low interest rates?

• Because of the high US military spending.

• Because they are confident in the government's ability to pay them back.

• Because of the US's large population.

• Because the US has a large number of natural resources.

What could make the long-run budget picture for the US much better than currently projected?

• A decrease in military spending.

• A massive pandemic reducing healthcare costs.

• Signs that the growth in healthcare costs could be slowing.

• Increasing the debt ceiling indefinitely.