SSEMA1f- Describe the difference between debt and deficit

Government Debt vs. Deficit

What is a budget deficit?

The national deficit is the amount of money the government went OVER budget in a GIVEN YEAR.

The amount spent exceeded government revenues.

What is a budget deficit?

The amount spent exceeded government revenues.

What is a budget surplus?

A national surplus occurs when the government spends less money than the revenue collected for any given year.

What is national debt?

The federal debt (public debt) is the TOTAL amount of money owed by the federal government to individuals, other countries, etc.

When there is a deficit at the end of the year, that money is added to the debt.

What caused the national debt?

Most of the U.S. national debt can be attributed to three things: 1. paying for wars2. increased government spending during recessions3. tax decreases not accompanied by decreases in government spending

Where does the Government get revenue?

The government borrows the money.

HowTo Get

Money

Print Mone

y

Bonds

Taxes*

Foreign Aid

What are the three types of taxes?

Progressive

• Rises as income rises

• Ex: Income tax

Proportional

• Everyone pays the same percent of their income

• Ex: FICA (Social Security)

Regressive

• Those with lower income pay higher taxes

• Ex: Sales tax

What are some other taxes to know Property tax: Tax on the value of a home and

the land it on

Capital Gains Tax: Tax based on the percentage of money people and businesses make on investments

Sin tax- high tax in order to reduce the consumption of s socially undesirable product