Explanations
The Debt Deficit Distinction
16th January 2017
KAL from the Economist provides the artistic genius behind this short video from the Economist.
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.
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- Budget Deficit
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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