Suppose the government owes $3,500 billion and then borrows $300 billion more this year.What is the debt and the deficit?
A) The debt is $3,800 billion, and the deficit is $3,500 billion.
B) The debt is $3,800 billion, and the deficit is $300 billion.
C) The debt is $300 billion, and the deficit is $3,800 billion.
D) The debt is $300 billion, and the deficit is $3,200 billion.

Question

Suppose the government owes $3,500 billion and then borrows $300 billion more this year.What is the debt and the deficit?  
A) The debt is $3,800 billion, and the deficit is $3,500 billion. 
B) The debt is $3,800 billion, and the deficit is $300 billion. 
C) The debt is $300 billion, and the deficit is $3,800 billion. 
D) The debt is $300 billion, and the deficit is $3,200 billion.

Quizplus · Accepted Answer

The debt is the total amount the government owes, which is $3,500 billion plus the additional borrowing of $300 billion, giving a total debt of $3,800 billion.

The deficit is the difference between the government's expenses and its revenues in a given year. In this case, we don't know what the government's revenues and expenses are, so we can only say that the additional borrowing of $300 billion contributes to an increase in the deficit. Therefore, the deficit is $300 billion.

Suppose the Government Owes $3,500 Billion and Then Borrows $300