Understanding Government Budget: Deficit, Surplus, and Debt
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Questions and Answers

What does it mean when the federal government has a budget deficit?

  • It spends more money than it receives in taxes in a given year (correct)
  • It has a balanced budget with equal spending and tax revenue
  • It receives more money in taxes than it spends in a given year
  • It accumulates all past deficits and surpluses

    • How is the government debt different from the government deficit?

  • The deficit refers to what happens each year, while the debt is accumulated over time (correct)
  • The deficit is accumulated over time, while the debt occurs each year
  • The deficit is the sum of all past surpluses, while the debt occurs each year
  • The deficit is the total debt, while the debt is just a yearly total

    • If a tax system increases with increasing income, what type of tax is it?

  • Fixed tax
  • Proportional tax
  • Progressive tax (correct)
  • Regressive tax

    • How does borrowing $10,000 per year for each of four years relate to deficits and debt?

    <p>Each year represents a deficit, and all years together represent the debt</p> Signup and view all the answers

    What is the main difference between the government deficit and the government debt?

    <p>The deficit represents a yearly budget imbalance, while the debt is the accumulation of past deficits and surpluses.</p> Signup and view all the answers

    How does a balanced budget differ from a budget surplus or deficit?

    <p>A balanced budget occurs when government spending equals tax revenues, while a surplus or deficit involves spending more or less than tax revenue.</p> Signup and view all the answers

    If a government consistently spends more than it receives in taxes for several consecutive years, what term would be used to describe its financial status?

    <p>Deficit spending</p> Signup and view all the answers

    Which type of tax system would be most beneficial for wealth redistribution in a society?

    <p>Progressive tax</p> Signup and view all the answers

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