Question

Q9 What is the main difference between Budget deficit and Debt? (Written response do not post a picture of your handwriting.)

Answer 1

A budget deficit occurs when the expenditure of a government, company, or entity exceeds the revenue they earn for a specified period typically calculated as a year. It's called deficit spending when spending exceeds income or revenue. National debt on a government-level is the sum of the deficit of each year. This would be their total debt to an organization or entity.

Deficit spending and the debt resulting from it will initially boost economic growth, especially if the country is in recession. Deficit expenditure is increasing the amount of money in the economy. It ramps up production and creates jobs, whether the money goes to jet fighters, bridges or education. Owing to higher interest rates, debt will harm the economy over the long term.

Many issues occur when the U.S. government lets the dollar's value fall. One consequence is that the settlement of the debt would be in cheaper dollars. As this happens, foreign governments and investors are less willing to purchase Treasury bonds which causes higher interest rates.

The debt is the cumulative amount of money to be owed by the US government. It reflects past deficit generation, minus surpluses. Debt is like the balance on your credit card statement, indicating the cumulative amount that you've accrued over time. The Congressional Budget Office predicts at the end of fiscal year 2019 that public debt will reach $16.6 trillion, or 78 per cent of GDP.

The deficit is the annual gap between government expenditure and government revenue. The government collects revenue in the form of taxation and other benefits each year, and spends money on various services such as national defense, social security, and health care. If the government is spending more than it brings in, it must run a deficit. If the government absorbs more than it spends, it will run a surplus.