POL-3.B—a. Define the government budget surplus (deficit) and national debt. b. Explain the issues involved with the burden of the…

a. Define the government budget surplus (deficit) and national debt. b. Explain the issues involved with the burden of the national debt.

• The government budget surplus (deficit) is the difference between tax revenues and government purchases plus transfer payments in a given year.
• A government adds to the national debt when it runs a budget deficit.
• A government must pay interest on its accumulated debt, thus increasing the national debt and increasingly forgoing using those funds for alternative uses. [See also LO POL-3.C on crowding out.]
• Enduring understanding POL-3: There are long-run implications of monetary and fiscal policy.