Question 1

What is a government budget deficit?

Accepted Answer

When the government spends more money than it collects in revenue

(opposite of a budget surplus)

Question 2

What happens to the national debt when the government runs a budget deficit?

Accepted Answer

The national debt increases over time

Question 3

What happens to a government's interest payments as its accumulated debt increases?

Accepted Answer

The interest payments also increase, making it increasingly difficult for the government to use those funds for alternative uses

Question 4

Why can it be beneficial not to balance the national budget?

Accepted Answer

It may be beneficial to run a budget deficit (expansionary) during recessionary gaps and run a budget surplus (contractionary) during inflationary gaps to help restore full employment

5.4 Deficits and the National Debt, AP Macroeconomics Flashcards