National Debt
The total accumulated stock of government borrowing — the sum of all past budget deficits minus surpluses, financed through outstanding bonds.
The national debt is the total outstanding stock of government liabilities — the cumulative result of all past budget deficits and surpluses. It is held by domestic and foreign investors, other government agencies (intragovernmental debt), and central banks.
Markets care about the debt-to-GDP ratio as a measure of debt sustainability. Rapidly rising debt relative to GDP can raise concerns about a government's ability to service obligations, leading to a widening sovereign credit spread and potential currency weakness. At extreme levels, it can constrain future fiscal policy response during downturns.
Related Terms
Bond Yield
The return an investor earns by holding a bond — driven by its price, coupon, and time to maturity. Moves inversely with price.
BeginnerBudget Deficit
When government spending exceeds tax revenue in a given year, the gap must be financed by issuing new debt — adding to the national debt.
BeginnerCurrent Account
Broadest measure of a country's transactions with the world — trade in goods, services, income, and transfers — and a key driver of long-run currency valuation.
IntermediateFiscal Policy
Government spending and taxation decisions that expand or contract the economy, independent of the central bank's monetary levers.
BeginnerTreasury
U.S. government debt securities issued by the Department of the Treasury — the global benchmark for risk-free rates and the deepest bond market in the world.
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