Debts/Debts Deficit Flashcards
1
Q
National Debt
A
Total amount the government owes (stock)
2
Q
Budget Deficit
A
How much expenditures exceed yearly revenue (flow)
3
Q
Revenue
A
Ex. taxes
4
Q
Expenditures
A
Social safety net, government programs, defense
5
Q
Classical Theory
A
Government borrowing comes at the expense of private borrowing.
When gov. borrows, it drives interest rates up=planned investment decreases for private borrowers.
6
Q
Crowding Out
A
A decrease of private borrowing from increased interest rates.
Data throughout time does not support the concern of Crowding Out.
7
Q
Crowding In
A
When government borrowing leads to economic growth and increased demand by generating employment.
