When the federal government incurs a budget deficit,it will

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When the federal government incurs a budget deficit, it borrows money from the public by issuing government securities like treasury bills, notes, and bonds. These securities are issued to investors who purchase them at an agreed interest rate, which represents the cost of borrowing. This is the most common way for the government to finance a deficit and is done through the Treasury Department. It is not feasible to mint more coins or impose a special tax on all income earners, credibility issues arise when creating money out of thin air or borrowing money from the Federal Reserve System, so the best option here is to borrow money from the public by issuing government securities.

When the Federal Government Incurs a Budget Deficit,it Will