Your definition would classify states as territories. Clearly that can't be correct, at least not for purposes of the exam.Walter:How do you define a "US Territory?" In the Constitution, the only thing I can find that comes close to defining a territory is "The Congress shall have power to dispose of and make all needful rules and regulations respecting the territory or other property belonging to the United States; and nothing in this Constitution shall be so construed as to prejudice any claims of the United States, or of any particular state." (Article IV if you're looking) That implies that a territory is literally "territory." Territory is any tract of land; region or district. If congress has defined it differently, please let me know.
I'm certain that Washington, D.C. would be marked as an incorrect response on the posted citizenship exam. A good citizen knows that intuitively.