When the government runs a budget deficit, it makes up the difference by:
A) issuing bonds.
B) paying down outstanding debt.
C) increasing transfer payments.
D) increasing public saving.

Question

Quizplus · Accepted Answer

When the government runs a budget deficit, it typically issues bonds to finance its spending. This means that it sells government bonds to investors, who lend money to the government in exchange for a promise to pay back the loan with interest in the future. This allows the government to finance its spending today without having to raise taxes or cut spending immediately.

When the Government Runs a Budget Deficit, It Makes Up