Unit 8: Federal Budget Policies

Introduction

What’s in This Chapter? What is the difference between a federal budget deficit and a national debt? This unit defines each concept, and describes the relationship between a country’s deficit and its national debt....

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Section 1: The United States Federal Budget

Deficits and Surpluses A government incurs a budget deficit when it spends more than it receives. For example, if a government spends $7 trillion and it receives $5 trillion from tax revenue and other sources, it incurs a...

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Section 2: The National Debt

National Debt Definition The national debt is a government’s sum of all deficits minus the sum of all surpluses from this and previous years. The more a government borrows each year, the more the national debt rises....

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Section 3: Debts around the World

The Debt as a Percentage of Gross Domestic Product Below is a table of the top 20 countries with the most national debt as a percentage of their nominal GDP. Japan, Venezuela, and Sudan earn the dubious honor of taking the gold,...

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Section 4: Deficit Financing

Financing Methods Most governments finance their budget deficits through 1. Borrowing funds from the public.  In the United States and other industrialized countries, this is the method through which governments finance the...

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Section 5: Budget Philosophies

Three Budget Philosophies Economists have varying opinions about how a government budget should be managed. The three most common budget philosophies are 1. The Annually Balanced Budget. A government annually balances its budget...

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Test Your Knowledge!

  Time limit: 0 Quiz-summary 0 of 10 questions completed Questions: 1 2 3 4 5 6 7 8 9 10 Information This is a ten question multiple-choice quiz covering the material in this Unit. I hope you do well! You have already...

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