tutor2u | The Debt Deficit Distinction

Explanations

The Debt Deficit Distinction

Geoff Riley

16th January 2017

KAL from the Economist provides the artistic genius behind this short video from the Economist.

The Debt Deficit Distinction

Some handy debt and deficit concepts:

Bonds

Both companies and governments can issue bonds. The issue of new government debt is done by the central bank and involves selling debt to capital markets.

Default

A default occurs when a borrower has broken the terms of a loan or other debt, for example if a borrower misses a payment.

Government debt

The total stock of unpaid debt issued by a government. A government will normally borrow money by issuing bonds or other securities.

Fiscal deficit

When government expenditure is higher than the revenue from taxes in a given year.

Geoff Riley

Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.

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