Which of the following statements is correct?
A)A budget deficit is a flow variable; debt is a stock variable.
B)A budget deficit is a stock variable; debt is a flow variable.
C)A budget deficit and the debt are both stock variables.
D)The budget deficit decreases when debt increases.
E)Debt increases when the budget deficit decreases.

Question

Quizplus · Accepted Answer

A budget deficit represents the amount by which government spending exceeds its revenue in a given period, which makes it a flow variable. Debt, on the other hand, is the accumulation of all past budget deficits and surpluses, and therefore represents a stock variable.

Which of the Following Statements Is Correct