Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 27: Problem 4

What is the difference between the federal budget deficit and federal government debt?

Short Answer

Expert verified
The federal budget deficit is the shortfall of revenue when compared to expenditure during a specific fiscal period, typically a year, while the federal government debt is the total accumulation of these deficits over time.

Step by step solution

01

Explaining Federal Budget Deficit

Start by explaining the term 'Federal Budget Deficit'. A federal budget deficit happens when the expenditures of the government exceed its revenue. Basically, it is the amount by which a government's spending goes over its earnings for a specific fiscal period, typically a year.
02

Explaining Federal Government Debt

Now, explain the term 'Federal Government Debt'. Federal government debt, also known as national debt, is the accumulated amount of money that the federal government owes to bondholders or other lenders. It represents the net accumulation of the federal government's annual budget deficits: it is the total amount of money that the U.S. federal government has borrowed to finance its operations.
03

Highlighting the Difference

Finally, highlight the difference. The key difference between the federal budget deficit and federal government debt lies in their time frame and accumulation. A federal budget deficit refers to a shortfall in revenue compared to expenditure over a particular fiscal period (typically a year), while federal government debt is the total accumulation of these deficits over time.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

In The General Theory of Employment, Interest, and Money, , ohn Maynard Keynes wrote: If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coal mines which are then filled up to the surface with town rubbish, and leave it to private enterprise \(\ldots\) to dig the notes up again \(\ldots\) there need be no more unemployment and, with the help of the repercussions, the real income of the community \(\ldots\) would probably become a good deal greater than it is. Which important macroeconomic effect is Keynes discussing here? What does he mean by "repercussions"? Why does he appear unconcerned about whether government spending is wasteful?

What are the key differences between how we illustrate a contractionary fiscal policy in the basic aggregate demand and aggregate supply model and in the dynamic aggregate demand and aggregate supply model?

An article in the Wall Street Journal discussing the Trump administration's goal of increasing the annual rate of growth in real GDP to 3 percent noted, "Two stubborn obstacles stand in his way. The work force isn't producing enough new workers, and the productivity of those working isn'\operatorname{tg} r o w i n g ~ f a s t ~ e n o u g h . " ~ B r i e f l y ~ e x p l a i n ~ w h y ~ t h e s e ~ two factors are "obstacles" to attaining a higher growth rate.

An infrastructure project in northern California funded in part by funds included in the 2009 America Recovery and Reinvestment Act (ARRA) involved expanding the Caldecott Tunnel between the California cities of Oakland and Orinda. A spokesperson for the California state agency in charge of the project mentioned that the Caldecott Tunnel project would have a ripple effect on employment. What does the spokesperson mean by "ripple effect"?

What is meant by "crowding out"? Explain the difference between crowding out in the short run and in the long run.
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free