If the flow of net taxes to government is less than the flow of government purchases, the government budget is said to be in _______ and the government must _________in the financial markets.

Question

Quizplus · Accepted Answer

When the flow of net taxes to the government is less than the flow of government purchases, it means the government is spending more than it is earning, resulting in a budget deficit. To finance this deficit, the government typically sells bonds in the financial markets to raise the necessary funds.

If the Flow of Net Taxes to Government Is Less