Question

Match the term to the correct calculation budger surplus [Choose] budget deficit [Choose] deficit-to-GDP ratio [Choose] debt-to-GDP ratio [Choose] external debt [Choose]

1. GDP - annual debt

2. government spending - tax revenue >0

3.government spending - tax revenue <0

4. annual debt/GDP

5 annual deficit/GDP

6. total debt - debt held by us households and institutions

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A budget deficit is government spending in excess of what?

A.. tax revenues

B. real GDP

C. household spending

D. consumption

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What would happen to the cyclical deficit if the GDP growth rate jumped from 2 percent to 4 percent?

A.decrease in deficit reduction

B.no change in deficit reduction

C.increase in deficit reduction

D.the deficit would be reduced to zero

Answer 1

budger surplus government spending - tax revenue <0 When the government has more revenues than the expenditure, we say there is budget surplus budget deficit government spending - tax revenue > When the government has less revenues than the expenditure, we say there is budget deficit deficit-to-GDP ratio annual deficit/GDP The annual deficit divided by the GDP is the deficit to GDP ratio The annual debt divided by the GDP is the debt to GDP ratio debt-to-GDP ratio annual debt/GDP external debt total debt - debt held by us households and institutions External debt excludes the debt from nationals and residents and domestic institutions

A budget deficit is government spending in excess of tax revenues. When the expenditure exceeds the revenue of the nation, we say there is budget deficit.