Which term describes the total amount of money the government has borrowed?

Which term describes the total amount of money the government has borrowed?

• A. Budget surplus
• B. Cash balance
• C. National Debt
• D. Fiscal balance

Answer: (C)

This tests understanding the difference between a cumulative stock of obligations and annual flow results. The total amount the government has borrowed and not yet repaid is the national debt. It accumulates over time as deficits occur and new debt is issued, and it represents outstanding obligations to lenders—domestic and foreign—at a given point in time. Other terms describe different concepts. A budget surplus is the amount by which revenue exceeds spending in a single period, a flow. The cash balance is just the amount of cash the government has on hand at a moment, not its accumulated borrowing. A fiscal balance refers to the yearly difference between revenue and spending, again a flow rather than the accumulated stock of debt.

This tests understanding the difference between a cumulative stock of obligations and annual flow results. The total amount the government has borrowed and not yet repaid is the national debt. It accumulates over time as deficits occur and new debt is issued, and it represents outstanding obligations to lenders—domestic and foreign—at a given point in time.

Other terms describe different concepts. A budget surplus is the amount by which revenue exceeds spending in a single period, a flow. The cash balance is just the amount of cash the government has on hand at a moment, not its accumulated borrowing. A fiscal balance refers to the yearly difference between revenue and spending, again a flow rather than the accumulated stock of debt.