The Difference Between the Budget Deficit and the National Debt

question 36

Multiple Choice

The difference between the budget deficit and the national debt is that the deficit is

• A) financed by borrowing; the debt is financed by selling bonds.
• B) a long-term concept; the debt is a short-term concept.
• C) the difference between the size of the debt and the amount of government revenues in a given year.
• D) the estimated revenue shortfall; the debt is the actual revenue shortfall.
• E) the difference between expenditures and revenues; the debt is the total amount owed by the government.

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Definitions:

Consumer Price Index

A gauge that tracks the overall variation in prices urban consumers pay for a selection of consumer products and services over a period.

Base Year

A reference year used in economics for comparative purposes, allowing the calculation of index numbers or real values.

Consumer Price Index

An index measuring the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care.

Base Year

A specific year against which economic or financial data is compared to measure economic performance over time.