The difference between the federal budget deficit and the national debt is that the:
A)deficit is a stock variable and the debt is a flow variable.
B)deficit is a flow variable and the debt is a stock variable.
C)debt includes interest payments and the deficit does not.
D)deficit can be positive,but the debt cannot.
E)debt can be negative,but the deficit cannot.

Question

Quizplus · Accepted Answer

The federal budget deficit is a yearly shortfall of revenues compared to expenditures, which is a flow variable. The national debt, on the other hand, is the total amount of money that the federal government owes to its creditors, which is a stock variable. Therefore, choice B is the best answer. The other choices are incorrect - the deficit can be positive or negative, and the debt cannot be negative. Additionally, the debt includes interest payments, but that is not the primary difference between the two concepts.

The Difference Between the Federal Budget Deficit and the National