A budget deﬁcit causes the government to issue or sell Treasury bonds.

Question

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When a government has a budget deficit, it means that their expenses exceed their revenue. In order to make up for this gap, the government sells Treasury bonds to investors. Treasury bonds are a way for governments to borrow money from the public, with the promise of paying back the principal plus interest at a later date. Therefore, a budget deficit causes the government to issue or sell Treasury bonds.

A Budget Deﬁcit Causes the Government to Issue or Sell