Homework assignment help

Economics
Tutor: None Selected Time limit: 1 Day

What is the relationship between budget deficits and national (public) debt? Why has the USA national debt been increasing for decades?

Sep 28th, 2015

Thank you for the opportunity to help you with your question!

Hello Ellery,

There is a clear relationship between budget deficits and national (public) debt.  In order to understand the relationship between the two we first have to understand what is meant by the term "national debt". National debt is the total amount of money that the federal government has borrowed over the years and has not paid back.

A budget deficit is the amount of money that the government spends each year in access of what its tax, tariffs and fee revenues bring in, its an accumulation of deficits that make up the total national debt.

Now that you know the definitions we can see the relationship clearly as to the reasons why the USA national debt has been increasing.  The USA has been doing business with various different countries and they have accumulated a debt to these other countries which they have not paid back and every time the USA has to trade with these other countries they create a debt that they must pay back.

When it comes to deficits these have been created because they are not making enough profit from the importing and exporting and trading that they do with these other countries, and even though the USA is a pretty well established country we do not have to do much trading and tax tariffs with other countries because most of the good and services that are outsourced start in the USA so this causes the deficit and cause the USA economy to suffer because very little profit is received from trading with other countries, and that is why there has been an increase in national debt for decades.

Please let me know if you need any clarification. I'm always happy to answer your questions.
Sep 28th, 2015

Your answer is now complete.  I am glad I was able to help today.

Sep 28th, 2015

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