What is national debt?

Question

BlackTom AI · Accepted Answer

Let’s break down each option to see what it describes about national debt.
Option a: 'The accumulated total of budget deficits over time.' This correctly captures the standard definition of national debt: it is the cumulative result of past deficits minus any surpluses, representing the total amount the government owes.
Option b: 'A situation whereby the government is owed money by individuals who could not pay their taxes on time.' This describes tax collection shortfalls and arrears, not the national debt itself. It confuses revenue collection issues with the broader stock of government liabilities.
Option c: 'The amount by which a government's spending exceeds its income over a particular period of time.' This is the definition of a budget deficit for that period, not the total stock of debt. A deficit is flow (per year), while debt is a stock (cumulative).
Option d: 'A situation that arises when the government borrows money in one particular year to make welfare payments.' This describes a one-off borrowing event or a financing action, not the sustained accumulated debt. It mischaracterizes debt as a single-year transaction rather than the ongoing accumulation.
Overall, option a correctly identifies national debt as the cumulative total of deficits (and surpluses) over time, whereas options b, c, and d describe related concepts that are not the definition of the national debt.

MUF0062 Economics Unit 2 - Semester 2, 2025 PRE-CLASS 2: Deficit versus Debt Video & Quiz (8 - 10 minutes)

What is national debt?

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