To finance a government deficit,A) money is borrowed.B) the government runs a budget surplus.C) taxes are lowered.D) government expenditures are lowereD.

Question

Lilica Dobos · Accepted Answer

Final Answer : A, Explanation :  When the government runs a deficit, it means that it is spending more than it is receiving in revenue. To make up for this shortfall, it can borrow money by issuing government bonds. These bonds are purchased by investors who provide the government with the necessary funds to cover its deficit. Therefore, option A is the best choice. None of the other options would provide the necessary funding to cover the deficit.

To finance a government deficit,

A) money is borrowed.
B) the government runs a budget surplus.
C) taxes are lowered.
D) government expenditures are lowereD.

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Learning Objectives

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