The government deficit is equal to
A) new borrowing from the public minus new money created.
B) new borrowing from the public plus new money created.
C) new money created minus new borrowing from the public.
D) new borrowing from the public divided by new money created.

Question

Quizplus · Accepted Answer

The government deficit is the amount by which government spending exceeds government revenue. This means that the government has to borrow from the public and/or create new money to make up the shortfall. Therefore, the government deficit is equal to new borrowing from the public plus new money created. Option B is the only choice that reflects this relationship.

The Government Deficit Is Equal to