#AP Macroeconomics: Budget, Debt, and Fiscal Policy - The Night Before

Hey! Let's make sure you're totally ready for the AP Macro exam. We're going to break down budget deficits, national debt, and how it all connects to fiscal policy. Let's do this!

#Government Budgets: Surplus, Deficit, and Debt

# Budget Basics

Federal Budget: A 12-month projection of government spending and revenue, starting October 1st.
Fiscal Stimulus: 🚀 Expansionary fiscal policy to boost the economy (increased government spending, decreased taxes, increased transfers).
Fiscal Restraint: 🚧 Contractionary fiscal policy to cool down the economy (decreased government spending, increased taxes, decreased transfers).
Government Revenue: 💰 Income from taxes (income, excise, regulatory).
Government Expenditures: 💸 Spending on programs (discretionary and non-discretionary).

# Surplus vs. Deficit

Budget Surplus: 🎉 Revenue > Expenditures. Excess funds can pay down debt.
Budget Deficit: 😩 Expenditures > Revenue. Requires borrowing, adding to the debt.
National Debt: 📈 The total accumulation of deficits over the years. A large debt can reduce future spending flexibility because of interest payments.

Key Concept

Remember: Deficits add to the debt, and debt interest payments can constrain future government spending. This is a crucial concept for understanding the long-term implications of fiscal policy.