If the government of a country owes $3,500 billion to the International Monetary Fund and then borrows an additional $300 billion this year, it implies that the _____
A) national debt is $300 billion and the fiscal deficit is $3.8 trillion.
B) national debt is $3,800 billion and the fiscal deficit is $300 billion.
C) national debt is $4,100 billion.
D) fiscal deficit is $3,800 billion.
E) national debt and fiscal deficit both equal $3.8 trillion.

Question

Quizplus · Accepted Answer

The national debt is the total amount of money a government owes to its creditors, which includes the International Monetary Fund and any other lenders. Therefore, the national debt is the initial $3,500 billion plus the additional $300 billion borrowed this year, resulting in a total national debt of $3,800 billion. 
On the other hand, the fiscal deficit is the difference between government spending and revenue, which is not provided in the given information. Therefore, the correct answer is B, which states that the national debt is $3,800 billion and the fiscal deficit is $300 billion.

If the Government of a Country Owes $3,500 Billion to the International