Asked by Dan Francis Rodriguez on May 09, 2024
Verified
The difference between the federal budget deficit and the national debt is that the:
A) deficit is a stock variable and the debt is a flow variable.
B) deficit is a flow variable and the debt is a stock variable.
C) debt includes interest payments and the deficit does not.
D) deficit can be positive,but the debt cannot.
E) debt can be negative,but the deficit cannot.
Stock Variable
A measurement at a specific point in time, such as the amount of money in a bank account or stock of goods.
Flow Variable
A variable that is measured over a specific period of time, representing dynamic elements of an economy like income or spending.
Federal Budget Deficit
The deficit occurring when government spending surpasses its income in a specific fiscal year.
- Understand the difference between the federal budget deficit and the national debt.
Verified Answer
GD
Gabriel DeBoerMay 16, 2024
Final Answer :
B
Explanation :
The federal budget deficit is a yearly shortfall of revenues compared to expenditures, which is a flow variable. The national debt, on the other hand, is the total amount of money that the federal government owes to its creditors, which is a stock variable. Therefore, choice B is the best answer. The other choices are incorrect - the deficit can be positive or negative, and the debt cannot be negative. Additionally, the debt includes interest payments, but that is not the primary difference between the two concepts.
Learning Objectives
- Understand the difference between the federal budget deficit and the national debt.