7D BALANCEDBUDGET, DEFICIT 7NATIONAL DEBTEPF7 demonstrate knowledge of how monetaryand fiscal policy influence employment, outputand prices
Balanced Budget, Deficit, NationalDebt The federal government’s annual budget is balanced when its revenues from taxes and user fees equal its expenditures. A budget deficit results when spending exceeds revenues. The national debt is the sum of what the federal government owes.
When is the federalgovernment’s budgetbalanced?
Balanced Budget When federal government revenues and expenditures are equal, the budget is balanced.
Budget Surplus The federal budget is in surplus when the government’s revenues exceed its expenditures.
Where does the federalgovernment get the money topay its expenditures when it hasa deficit?
Money, when in a deficitWhen the budget is in deficit, the government must borrow by selling securities to individuals, corporations, financial institutions, and/or other governments to finance that deficit.
Cost of the National Debt The national debt is the total amount of money the federal government owes. This is the sum of all its past annual deficits and surpluses. The government pays interest on the money it borrows to finance the national debt. The money spent on this debt service (interest) is not available to pay for other government priorities.