France’s Rising Budget Deficit and Debt

France’s government budget deficit is expected to exceed 6 per cent of GDP, driven by spending on military and green transition. Government debt is forecast to reach 115 per cent of GDP, and interest payments to 2.9 per cent next year. —Source: economist.com, December 7, 2024

Answer the following questions to check your understanding of the story.

Why does France have a government budget deficit?

France has a government budget deficit because __________.

a) tax revenue exceeds what the government spends

b) tax revenue is less than what the government spends

c) government interest payments are too large

d) government transfer payments exceed government expenditure on goods and services

How does a government budget deficit contribute to making the deficit even larger?

A government budget deficit ___________ the debt and ___________ interest payments on the debt which, in turn, makes the government budget deficit even ___________

a) decreases, decreases, smaller

b) increases, increases, larger

c) decreases, decreases, larger

d) increases, increases, smaller

France’s Rising Budget Deficit and Debt

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