Which of the following is correct with regard to budget deficits and the national debt?
A) Canada's national debt is the amount of money Canada owes the United States.
B) A budget deficit occurs when income tax revenue is less than interest payments on the national debt.
C) A budget deficit occurs when government expenditures in a given year exceed government revenues.
D) There is no relationship between annual budget deficits and the total national debt.
E) The national debt is more important than annual budget deficits.

Question

Quizplus · Accepted Answer

A budget deficit occurs when the government spends more money than it takes in through revenue. The national debt, on the other hand, is the total amount of money a government owes to creditors. While budget deficits can contribute to the national debt, they are not the only factor.

Which of the Following Is Correct with Regard to Budget