A federal budget deﬁcit is ﬁnanced by the

Question

Quizplus · Accepted Answer

A federal budget deficit is financed by the government issuing or selling Treasury securities, such as bonds or bills, to the public. This process increases the government's debt to the public, as it borrows money to finance its spending. Option A is incorrect as the government purchasing Treasury securities would reduce the money supply, whereas financing a deficit involves increasing the money supply. Options C and D are unrelated to financing a deficit, as they relate to exports and private investment spending, respectively.

A Federal Budget Deﬁcit Is ﬁNanced by the