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Chapter 14: Problem 1

Define: a. national debt b. budget deficit c. budget surplus

Short Answer

Expert verified
National debt refers to the total amount of money that a country's government has borrowed. Budget deficit occurs when expenses exceed revenue, indicating the government's financial health while budget surplus occurs when revenue exceeds spending, showing healthy financial status.

Step by step solution

01

Define National Debt

National debt refers to the total amount of money that a country's government has borrowed. It could be as a result of any amount borrowed by the government to finance expenditures that exceed its income. It is essentially the sum of all previous deficits, less the amount the government has paid back. It includes both the debt held by the public and debt held by government accounts.
02

Define Budget Deficit

A budget deficit happens when expenses exceed revenue and signal the financial health of a government. A deficit occurs when a government, corporation, or individual’s spending exceeds income over a particular period. This budget deficit is often funded or financed by borrowing, just like an individual might use a credit card to finance a purchase when they don't have sufficient funds in their bank account.
03

Define Budget Surplus

A budget surplus occurs when revenue exceeds expenditure during a specific financial period. It indicates a healthy financial status because there's leftover money after accounting for all spending. This could be used to pay off debt, save for future periods or could be invested to generate more wealth.

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