Question

How are national debt and deficit related? (5 points)

Answer 1

National debt is the total amount amount of money that a government has borrowed. National deficit is total of all previous annual government deficits. Keep in mind that a deficit is the difference between what a government takes in and what it spends. The two are related because when the government is unable to fully repay any debt it has accrued that money becomes a part of the annual national deficit. So as the amount of national debt increases so does the amount of national deficit.