Which of the following statements is true?
A)There is no relationship between the federal deficit and the federal debt.
B)A federal deficit adds to the federal debt.
C)The change in the federal deficit each year equals the federal debt.
D)The federal debt is the same as the federal deficit.
E)The federal debt grew in the period when there was a federal budget surplus.

Question

Quizplus · Accepted Answer

A federal deficit occurs when the government spends more money than it collects in revenue, and this deficit is financed by borrowing. Therefore, a federal deficit adds to the federal debt, which is the total amount of money borrowed by the government over time. The other statements are false; there is a relationship between the federal deficit and debt, the change in the federal deficit each year does not equal the federal debt, the federal debt is not the same as the federal deficit, and it is not possible for the federal debt to grow during a period of budget surplus.

Which of the Following Statements Is True