Which term describes the total accumulation of past deficits and surpluses owed by the government?

Which term describes the total accumulation of past deficits and surpluses owed by the government?

• A. National Debt
• B. Monetary Policy
• C. Inflation
• D. Deficit

Answer: (A)

This question tests the idea of what the government owes after many years of borrowing and repayment. The total accumulation of past deficits and surpluses owed by the government is called the national debt. It grows whenever the government runs deficits, because borrowing adds to the amount owed. Surpluses can reduce the debt by paying down previous borrowings, though they are less common. The other terms don’t describe this stock of obligations: a deficit is the yearly shortfall between spending and revenue, monetary policy is about the central bank’s actions to influence the economy, and inflation is a rise in price levels.

This question tests the idea of what the government owes after many years of borrowing and repayment. The total accumulation of past deficits and surpluses owed by the government is called the national debt. It grows whenever the government runs deficits, because borrowing adds to the amount owed. Surpluses can reduce the debt by paying down previous borrowings, though they are less common. The other terms don’t describe this stock of obligations: a deficit is the yearly shortfall between spending and revenue, monetary policy is about the central bank’s actions to influence the economy, and inflation is a rise in price levels.