Question : The total amount of money owed by a government is known as:
Option 1: The budget deficit
Option 2: The national debt
Option 3: The trade deficit
Option 4: The current account deficit
Correct Answer: The national debt
Solution : The correct answer is (b) The national debt.
The national debt refers to the total amount of money owed by a government, usually the central government, resulting from accumulated budget deficits over time. It represents the cumulative amount of borrowing that a government has undertaken to finance its expenses when its expenditures exceed its revenues.
The national debt is typically incurred through the issuance of government bonds and other forms of borrowing. It reflects the outstanding financial obligations of the government to its creditors, which can include individuals, domestic and foreign investors, financial institutions, and other governments.
The national debt is an important indicator of a government's fiscal health and its ability to manage its finances. It is typically expressed as a gross or net amount and is often measured as a percentage of a country's gross domestic product (GDP) to assess its relative size and sustainability.
Question : What is the difference between a deficit and a debt?
Option 1: A deficit is the amount by which spending exceeds revenue in a given year, while a debt is the total amount of money owed by the government
Option 2: A deficit is the total amount of money owed by the government, while a debt is the amount by which spending exceeds revenue in a given year
Option 3: A deficit is the amount of money owed to foreign countries, while a debt is the amount of money owed to domestic lenders
Option 4: A deficit is the amount of money owed to domestic lenders, while a debt is the amount of money owed to foreign countries
Question : The government's borrowing from foreign sources is known as ____________.
Option 1: External debt
Option 2: Public debt
Option 3: Trade deficit
Option 4: Current account deficit
Question : The difference between total government expenditures and total government revenues is known as:
Option 2: The budget surplus
Option 3: The national debt
Option 4: The trade deficit
Question : Public debt refers to:
Option 1: Debt owed to the government
Option 2: Debt owed by the government
Option 3: Debt owed by public companies
Option 4: Debt owed by private individuals
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