A government can finance its budget deficit by doing all of the following except:

Question

Quizplus · Accepted Answer

Buying bonds is a method used by investors, including individuals and institutions, to lend money to the government. When a government is financing its budget deficit, it does so by borrowing money, which can involve selling bonds to investors (not buying them), borrowing from its central bank, or printing money. Buying bonds would actually be a way for the government to spend its resources, not to finance a deficit.

A Government Can Finance Its Budget Deficit by Doing All