The Difference Between the Federal Budget Deficit and the National

question 41

Multiple Choice

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

• A)deficit is a stock variable and the debt is a flow variable.
• B)deficit is a flow variable and the debt is a stock variable.
• C)debt includes interest payments and the deficit does not.
• D)deficit can be positive,but the debt cannot.
• E)debt can be negative,but the deficit cannot.

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Definitions:

Progressive Tax

A tax system in which the tax rate increases as the taxable amount increases, typically structured to tax higher income earners at a higher rate.

Taxes

Compulsory financial charges or other types of levies imposed upon a taxpayer by a governmental organization in order to fund various public expenditures.

Lump Sum Tax

A type of tax that is a fixed amount, no matter the change in circumstance of the taxed entity.

Horizontal Equity

The idea that taxpayers with similar abilities to pay taxes should pay the same amount