Final answer:
The national debt is best described as the sum of all federal budget deficits, past and present. It accumulates when the government funds deficits by issuing Treasury bonds, and it includes all the debt owed up to the current period. Option C is correct answer.
Step-by-step explanation:
The national debt is a significant concept in economics relating to the finances of a government. It represents the total amount of money that a government owes at a particular time. To understand the national debt better, it's important to break down the components of how it accumulates and what it comprises.
The notion that the national debt consists of the value of all U. S. Treasury bonds owned by foreigners is not accurate, as it does not consider domestic holdings. When considering the percentage of GDP needed to finance a country's investment, it's better described as a measure of economic performance related to debt rather than the debt itself.
The national debt is not the amount by which this year's federal spending exceeds its taxes, which actually defines a budget deficit. Instead, the national debt is the cumulative result of those annual deficits and surpluses. So, whenever the government spends more than it earns, it accumulates a deficit, which is typically financed through the issuance of Treasury bonds.
The correct choice for what best describes the national debt is: c. the sum of all federal budget deficits, past and present. This encompasses all the years of borrowing, both from domestic and foreign creditors, and includes all the accrued debt up to the current period.