Question

Explain the connection between a government budget deficit and a government debt.

a. there is no connection between the government budget deficit and government debt.
b. canada's federal government debt has never exceeded 100 percent of gdp
c. when the government budget is in deficit, government debt increases.
d. when the government budget is in surplus, government debt decreases

Answer 1

The government budget deficit and government debt are connected in that when the government budget is in deficit, the government debt increases.

Step-by-step explanation:

The connection between a government budget deficit and a government debt is that when the government budget is in deficit, the government debt increases.

The budget deficit refers to the amount of money the government spends in excess of the amount it collects in revenue during a particular year. This deficit adds to the government's overall debt, which consists of the accumulation of all past deficits and surpluses. Therefore, when the government budget is in deficit, it means that the government is spending more money than it is receiving, resulting in an increase in the government debt.

For example, if a government has a budget deficit of $100 billion in a given year, it means that it spent $100 billion more than it collected in revenue during that year. This additional $100 billion adds to the government debt, which represents the total amount that the government has borrowed over time.