Study Guide – Lesson 12 (Debt & Deficits)

Study Guide – Lesson 12 (Debt & Deficits) - Study...

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Study Guide – Lesson 12 (Debt and Deficits) What is the definition of a deficit? What is the definition of a surplus? What is the definition of public debt? Deficit – Spending exceeds revenue Surplus – Spending less than we receive in revenue. Public Debt – Acumination of all past debts and surpluses, up to a certain time. What is the difference between looking at total public debt, and the debt-to-GDP ratio? What does the debt-to- GDP ratio tell us that debt alone does not? Total public debt is the number the entire country owes as a whole. Debt-to-GDP ratio – Breaks down the public debt to the individual level. This tells us how the public debt affects households. How does the government finance its spending when it does not have enough tax revenue? Bonds Who owns the public debt? (We talked about three main groups of people.) Other Parts of Gov. The Public Foreign Gov./Indv. What is the difference between the annual and cyclical approaches to balancing the federal budget? What effect might the annual approach have on the economy, particularly in times of recession?
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