The government finances its debt by:

Question

Quizplus · Accepted Answer

The government finances its debt by issuing bonds, which are essentially IOUs that can be bought by investors. The government promises to pay back the face value of the bond (the amount of money it borrowed) plus interest over a set period of time. This is a common way for governments to finance their debts because it allows them to spread out the cost of borrowing over a longer period of time and potentially at a lower interest rate. The other options (printing money, borrowing from the Fed, borrowing from foreign investors) can also be used to finance debt, but they each come with their own risks and drawbacks.

The Government Finances Its Debt By