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, meaning it spends more money than it collects in revenue. This deficit is usually financed through borrowing, which adds to the overall public debt over time.

Option B is incorrect as increasing money supply in the economy does not necessarily mean that the government is adding to its public debt.

Option C is partially correct, as the government may add to its public debt by buying government bonds, but this is only true if the bonds are bought with borrowed money, which is then added to the public debt. If the government buys the bonds with surplus revenue or cash reserves, then it does not add to the public debt.

Option D is incorrect as raising tax collection actually reduces the budget deficit and may help bring down the public debt over time.

The Government Adds to Its Overall Public Debt Whenever It