Which of the following is true?
A) If the government has a budget deficit, the national debt is increased.
B) National debt is a marginal value of outstanding Commonwealth Government securities.
C) National debt represents the extent of future borrowing by the federal government.
D) A full amount of national debt is held by the central bank.

Question

Quizplus · Accepted Answer

If the government has a budget deficit, it means that its expenses exceed its revenue. To finance this deficit, the government borrows money by issuing treasury bonds and other securities, which increase the national debt. Therefore, option A is true. Option B is incorrect because Commonwealth Government securities are only one type of securities that contribute to the national debt, and the national debt is not a marginal value of them. Option C is incorrect because the national debt reflects the total amount of outstanding federal government debt, not just future borrowing. Option D is incorrect because the central bank does not hold the full amount of national debt, although it may hold a portion of it.

Which of the Following Is True