The government adds to its overall public debt whenever it

Question

Quizplus · Accepted Answer

The government adds to its overall public debt whenever it runs a budget deficit, which means that its spending exceeds its revenue. In order to finance the deficit, the government must borrow by issuing new bonds, which increases its debt.

Answer: C 
 When the government buys its own bonds, it is effectively borrowing from itself and adding to its public debt. This is because the government must pay interest on the bonds it issues, and the interest payments increase the size of the debt.

Therefore, the two best choices are A and C.

The Government Adds to Its Overall Public Debt Whenever It