AP Macroeconomics Flashcards: Government Deficits and the National Debt
Written by AP Content Team, Verified for 2026 AP Exams, Last updated: May 2026
Review key ideas with interactive flashcards. This set includes 10 cards to help you master important concepts.
If a government's tax revenues are $4 trillion and its spending (purchases plus transfers) is $3.5 trillion, what is the state of its budget?
The government has a budget surplus because its tax revenues are greater than its spending.
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If a government's tax revenues are $4 trillion and its spending (purchases plus transfers) is $3.5 trillion, what is the state of its budget?
The government has a budget surplus because its tax revenues are greater than its spending.
How can interest payments on the national debt create a cycle of increasing debt?
The requirement to pay interest on the debt increases government spending, which can contribute to future deficits and thus increase the total national debt.
What is a primary financial obligation a government has due to its accumulated debt?
A government must pay interest on its accumulated national debt.
What is the relationship between a budget deficit and the national debt?
When a government runs a budget deficit, it adds to the total national debt.
Explain the opportunity cost associated with paying interest on the national debt.
Funds used to pay interest on the debt are funds that cannot be used for alternative purposes, such as education, infrastructure, or defense.
What are the key issues that constitute the "burden of the national debt"?
The burden of the debt involves the necessity of paying interest, which can increase the debt further and means forgoing the use of those funds for other services.
A country begins the year with a national debt of $20 trillion. It then runs a budget deficit of $1.5 trillion. What is the new national debt?
The new national debt is $21.5 trillion, as the current year's deficit is added to the accumulated debt.
Define a government budget surplus.
A government budget surplus is the amount by which tax revenues exceed government purchases plus transfer payments in a given year.
What is the national debt?
The national debt is the total amount of money a government owes, accumulated from past budget deficits.
What is a government budget deficit?
A government budget deficit occurs when government purchases plus transfer payments are greater than tax revenues in a given year.