Explain the relation between government deficit and government debt.
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Explain the relation between government eficdit and government debt.
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Deficit and debt are intimately connected concepts. Deficit is analogous to a sallow that adds to the debt stock. If the government borrows year after year, the debt grows, and the government is obliged to pay more and more interest. Interest payments are included in the loan. In other terms, the government deficit is the difference between total government expenditure and total government income, and the government debt is the amount of debt owed to public, foreign, and other organisations by the government.
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