National debt is likely to fall when
A)there is a succession of budget deficits.
B)government's expenditure falls short of its receipts.
C)government's expenditures exceed its receipts.
D)government expenditure equals revenue.

Question

Quizplus · Accepted Answer

When government's expenditure falls short of its receipts, it means the government is generating surplus revenue which can be used to pay off debt, leading to a decrease in the national debt. A succession of budget deficits (A) would increase the national debt, while when government's expenditures exceed its receipts (C), it means the government is running a budget deficit, which would also increase the national debt. When government expenditure equals revenue (D), the national debt remains unchanged.

National Debt Is Likely to Fall When