AP Macroeconomics Practice Quiz: Government Deficits and the National Debt
Written by AP Content Team, Verified for 2026 AP Exams, Last updated: May 2026
Test your understanding with short quizzes. This quiz has 10 questions to check your progress.
Question 1 of 10
All Questions (10)
A) The total accumulated amount of money owed by the government from past borrowing.
B) The situation where tax revenues are greater than government spending plus transfer payments.
C) The situation where government spending plus transfer payments are greater than tax revenues.
D) The annual interest payment the government must make on its accumulated debt.
Correct Answer: C
According to the provided text, the government budget deficit is the difference between tax revenues and government purchases plus transfer payments. A deficit occurs when spending (purchases plus transfers) exceeds revenues.
A) The amount of a budget deficit in a single fiscal year.
B) The total accumulation of past government budget deficits.
C) The difference between a country's exports and imports.
D) The total amount of tax revenue collected by the government annually.
Correct Answer: B
The text states that a government adds to the national debt when it runs a budget deficit. This implies that the national debt is the sum or accumulation of these past deficits.
A) The national debt will increase.
B) The national debt will decrease.
C) The national debt will remain unchanged.
D) The interest rate on the national debt will be eliminated.
Correct Answer: A
The provided content explicitly states, 'A government adds to the national debt when it runs a budget deficit.' Therefore, a deficit directly causes an increase in the national debt.
A) are also able to be used for alternative government programs.
B) cannot be used for alternative purposes, such as education or infrastructure.
C) are directly converted into tax cuts for all citizens.
D) automatically lead to a budget surplus in the following year.
Correct Answer: B
The text explains that by paying interest, the government is 'increasingly forgoing using those funds for alternative uses.' This describes the opportunity cost—the value of the next-best alternative that was given up.
A) The government has a budget surplus of $1 trillion.
B) The government has a budget deficit of $0.5 trillion.
C) The government has a balanced budget.
D) The government has a budget surplus of $0.5 trillion.
Correct Answer: B
Total government outlays are purchases plus transfers ($4 trillion + $1.5 trillion = $5.5 trillion). The budget balance is tax revenues minus outlays ($5 trillion - $5.5 trillion = -$0.5 trillion). A negative balance is a deficit of $0.5 trillion.
A) It forces the government to reduce tax revenues.
B) It decreases the amount of transfer payments.
C) It further increases the total national debt.
D) It guarantees a budget surplus for the next fiscal year.
Correct Answer: C
The content states, 'A government must pay interest on its accumulated debt, thus increasing the national debt...' The interest payment itself is a government outlay that adds to the debt if not covered by surplus revenues.
A) It allows the government to reduce the national debt.
B) It causes an automatic increase in the national debt.
C) It has no relationship to the national debt.
D) It forces the government to increase transfer payments.
Correct Answer: A
The text states that a deficit adds to the national debt. By logical extension, a surplus (the opposite of a deficit) provides the government with funds that can be used to pay down and therefore reduce the existing national debt.
A) Interest payments are counted as tax revenue, which encourages more spending.
B) Interest payments are a form of government spending that, if not covered by sufficient tax revenue, can contribute to a new budget deficit.
C) All interest payments are legally required to be refinanced by issuing new debt.
D) Interest payments directly reduce a country's ability to collect taxes in the future.
Correct Answer: B
Interest on the debt is a government outlay. Like other spending, if total outlays (including interest) exceed tax revenues, the government runs a deficit. This deficit adds to the national debt, which in turn leads to higher interest payments in the future, creating a potential cycle.
A) National debt and government purchases.
B) Tax revenues and the national debt.
C) Tax revenues and the sum of government purchases and transfer payments.
D) Government purchases and transfer payments.
Correct Answer: C
The text explicitly defines the government budget surplus (deficit) as 'the difference between tax revenues and government purchases plus transfer payments in a given year.'
A) future generations must pay higher taxes or receive fewer government services because of past borrowing.
B) the government is legally required to pay off the entire debt within a 10-year period.
C) running a national debt is always beneficial for short-term economic growth.
D) the national debt is a measure of private, not public, borrowing.
Correct Answer: A
The text explains the burden through the lens of interest payments, which consume funds that could be used for 'alternative uses.' This implies a trade-off where resources are diverted from providing current or future services to servicing past debt, which is a burden passed on to future taxpayers and beneficiaries of government spending.