If a government runs a budget deficit in one year, and a budget surplus the next...

Question

Question

If a government runs a budget deficit in one year, and a budget surplus the next year, what is the impact on the national debt?

Group of answer choices

The national debt remains unchanged

The national debt decreases

Indeterminate without the magnitudes of the deficit and surplus

The national debt increases

business economics

Answer 1

Answer #1

Correct option is (3).

National debt at end of year N = National debt at beginning of year N + Budget surplus - Budget deficit

Unless we know exact values of budget surplus and deficit, we can't compute the value of national debt.

Answer 2

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