What is national debt?

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BlackTom AI · Accepted Answer

The question asks: What is national debt? Rather than jumping to conclusions, let's consider what the term typically means in economics.

Option present: a. The accumulated total of budget deficits over time.

First, note that national debt is commonly described as the total amount the government owes as a result of past borrowing. This is essentially the accumulated sum of deficits over many years, after accounting for any surpluses or repayments and including interest accrued on the outstanding debt. In practice, this option captures the core idea that national debt grows as deficits accumulate over time.

It is worth distinguishing between deficits and debt to avoid a common mix-up. A deficit is the annual shortfall where expenditures exceed revenues in a given year, while the debt is the ongoing stock of borrowing resulting from past deficits (less any repayments). Therefore, describing national debt as the accumulated total of budget deficits over time is conceptually accurate, though one could add that interest on the debt and any surpluses/offsets also influence the exact amount.

Given the provided single option, there are no other choices to compare. In a typical multiple-choice setting, you would contrast all options and select the one that most accurately defines national debt, which this option does by emphasizing the accumulation across years.

In summary, the statement presented aligns with the standard understanding that national debt reflects the cumulative borrowing of a government over time due to past deficits, making it a reasonable and accepted definition.

MUF0062 Economics Unit 2 - Semester 2, 2025 Revision Quiz - Fiscal Policy (10 - 15 minutes)

What is national debt?

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