The difference between the federal budget deficit and the national debt is that the:
a. deficit is a stock variable and the debt is a flow variable.
b. deficit is a flow variable and the debt is a stock variable.
c. debt includes interest payments and the deficit does not.
d. deficit can be positive, but the debt can not
e. debt can be negative, but the deficit cannot.
b. deficit is a flow variable and the debt is a stock variable.
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Subsidies _______________the cost of production, encouraging current producers to stay in the market and new producers to enter.
Fill in the blank(s) with the appropriate word(s).
_____, the time-inconsistency problem gets eliminated
a. When an inflation or a recession is correctly anticipated b. When lags associated with monetary and fiscal policy are extremely short c. When discretionary macro policy is replaced with fixed policy rules which are well publicized d. When expectations about the economy adjust very slowly e. When the price level in an economy adjusts over time with changes in aggregate demand