When federal government expenditures exceed tax receipts, the Treasury must

Question

Quizplus · Accepted Answer

When federal government expenditures exceed tax receipts, the Treasury often covers this deficit by selling bonds to raise the necessary funds. This does not directly expand the money supply (which is more directly influenced by the central bank's policies), nor does it immediately involve raising taxes or reducing spending, although those could be longer-term strategies to address persistent deficits.

When Federal Government Expenditures Exceed Tax Receipts, the Treasury Must