To what type of government does the term 'federal' refer?

The term 'federal' specifically refers to a system of governance where power is divided between a central (or national) government and individual states or provinces. In a federal system, the national government has authority over matters that affect the whole country, such as defense, foreign relations, and national trade, while state governments have power over local concerns such as education, transportation, and law enforcement.

This distinction is crucial in understanding different governmental structures. In contrast, the terms ‘state government’ and ‘local government’ refer to narrower levels of governance, focusing on more localized decision-making and administrative powers. The 'private sector' does not pertain to a type of government at all, as it involves businesses and organizations not operated by the government. Thus, the correct answer highlights the central role of the national government in a federal system.