Which statement best describes the relationship between government deficit and government debt?
A) If the government currently has a budget deficit, currently it must also have a debt.
B) If the government currently has a budget deficit, the debt is increasing.
C) If the government currently has a budget deficit, government expenditures must be less than taxes.
D) If the government currently has a budget deficit, national savings must be increasing.

Question

Quizplus · Accepted Answer

Government deficit refers to the excess of government expenditures over government revenues in a given period. Government debt, on the other hand, refers to the total amount of money owed by the government to its creditors. If the government has a deficit, it means it is spending more than it is earning, so it must borrow money to finance its operations. This borrowing contributes to an increase in the government's debt. Therefore, if the government currently has a budget deficit, the debt is increasing.

Which Statement Best Describes the Relationship Between Government Deficit and Government