Glossary · Macro · Fiscal policy

Budget deficit and national debt

A budget deficit is the amount government spending exceeds tax revenue in a year, which it covers by borrowing. The national debt is the total of all past deficits still owed. A deficit is a flow, the debt is a stock.

Also called: deficit, national debt, public debt, debt-to-GDP ratio

Draw it yourselfTaught in: Limits of Fiscal Policy

Related terms

Crowding outFiscal policyLoanable funds market

More from fiscal policy

Automatic stabilizersMarginal propensity to consume (MPC)Policy lagsSpending multiplierTax multiplier

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