When the federal government runs a budget deficit:

Question

Quizplus · Accepted Answer

When the federal government runs a budget deficit, it means it is spending more than it is bringing in through revenue. In order to make up for this shortfall, the government borrows money from the public by issuing bonds. These bonds are essentially IOUs that pay a fixed interest rate over a certain period of time, and are bought by investors such as individuals, companies, and foreign governments. This borrowing increases the national debt, which is the total amount of money the government owes to its creditors.

When the Federal Government Runs a Budget Deficit