The government borrows money to cover budget deficits by

Question

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The government borrows money to cover budget deficits by selling bonds to investors. This allows the government to borrow money from the private sector and pay it back with interest over time. Option A is incorrect because the government is not purchasing bonds, but rather selling them to investors. Option B is incorrect because petitioning the IMF would be a last resort for a government experiencing financial difficulties, not a typical means of borrowing to cover a budget deficit. Option C is incorrect because the government does not typically borrow money from commercial banks like Citibank, but rather sells bonds to the public and institutional investors.

The Government Borrows Money to Cover Budget Deficits by