Debt and Deficits
The economic terms of debt and deficit are often confused and misunderstood. Everyone understands it has something to do with owing money, but after that it can get confusing. Debt and deficit are common terms used to describe the net economic status of a government. The term deficit is an annual number. It refers to the difference between … Keep Reading → what the government spends every year and what it collects in revenue (taxes, etc.). If the government spends more than it collects it has a deficit for the year; if it collects more than it spends, it has a surplus for the year. The term debt is the running tally of yearly deficits. It is the total money that is owed to make up the yearly deficits. It is possible to have a surplus one or more years and still have a debt; the surplus may reduce, but not eliminate, the debt.
