5.4 review

a... is when tax revenues are less than gov. purchases plus transfer payments in a year

BD -> # the gov. overspends in 1 year

ND -> accumulation of deficits over multiple years

budget deficit = G - T

occurs when gov. revenue exceeds gov. spending in a fiscal year

cumulative amount of money the gov. owes to creditors due to past borrowing

each year's deficit increases the national debt

if the gov. runs a budget surplus, it can use the extra revenue to pay down the national debt

cause of BD #1

lower tax revenues due to reduced incomes & profits

increased gov. spending to stimulate the economy

cause of BD #2

tax cuts or increased gov. spending to stimulate the economy

cause of BD #3

natural disasters, wars, or public health crises can increase gov. expenditures