The government budget deficit

Question

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The government budget deficit is the difference between government spending and government revenue. Transfer payments are payments made by the government to individuals or businesses, such as Social Security benefits or unemployment benefits. Tax revenue is the money that the government collects from taxes. The level of outstanding debt is the amount of money that the government owes to its creditors.An increase in transfer payments will increase the government budget deficit because it will increase government spending. A reduction in tax revenue will increase the government budget deficit because it will decrease government revenue. An increase in the level of outstanding debt will increase the government budget deficit because it will increase the government's interest payments.

The Government Budget Deficit