Question

What is the relationship between a debt and a deficit?

A. A debt becomes a deficit after it has been paid.

B. A debt is the total of accumulated and unpaid deficits.

C. A debt can be paid off, whereas a deficit cannot be erased.

D. A debt is held by the borrower, whereas a deficit is held by the lender.

E. A debt exists in the short-term, whereas a deficit is long-term.

Answer 1

B. A debt is the total of accumulated and unpaid deficits is the relationship between a debt and a deficit.

The relationship between a debt and a deficit is that a debt is essentially the accumulation of deficits over time.

A deficit occurs when expenditures exceed revenues in a given period, usually a fiscal year.

If a government or entity consistently runs deficits, the total amount of those deficits adds up to the overall debt. In other words, the deficit is an annual shortfall, and the debt is the cumulative result of these annual deficits.

Therefore, B. A debt is the total of accumulated and unpaid deficits is the relationship between a debt and a deficit.