Work through the list without notes. If you cannot do a statement, follow its link, then come back. Guide = study guide; Practice = practice questions.
Understanding
- I can define a budget surplus, a budget deficit and a balanced budget. (Guide: “The government budget”; Practice Q1)
- I can explain why transfer payments and interest count as budget spending even though they are not part of G. (Guide: “The government budget”; Practice Q1, Q4)
- I can explain the difference between the deficit (a flow) and the national debt (a stock). (Guide: “Deficit and debt: flow and stock”; Practice Q2)
- I can explain how a deficit is financed by borrowing and why that adds to the debt. (Guide: “How a deficit is paid for”; Practice Q2)
Calculation
- I can calculate a budget balance from tax revenue, purchases, transfers and interest. (Guide: Worked example 1; Practice Q1, Q5(a), Q7(a))
- I can update the national debt through several years of deficits and surpluses. (Guide: Worked example 1; Practice Q3, Q5(b), Q7(b))
- I can calculate the interest bill and its share of tax revenue. (Guide: Worked example 2; Practice Q5(c), Q6(a)–(b))
- I can show how borrowing to pay interest makes the debt grow over several years. (Guide: Worked example 2; Practice Q6(c))
Reasoning
- I can explain why a falling deficit still raises the debt, and why only a surplus lowers it. (Guide: Worked example 1; Practice Q2, Q5(d))
- I can explain why interest on the debt uses funds that could go to other uses and why borrowed interest makes the debt grow faster. (Guide: “The burden of the national debt”; Practice Q4, Q6(d)–(e), Q7(c))
- I can describe crowding out and future taxes as further issues in the burden of the debt. (Guide: “The burden of the national debt”; Practice Q7(e))
All ticked? Move on to Topic 5.5, Crowding Out, or return to the course roadmap.