During what the government should adopt a deficit budgeting policy?
4. Fiscal policy. A budget deficit may be used to finance an expansionary fiscal policy, which involves lowering income and corporate taxes (therefore reducing revenue for the government) and increasing government spending on infrastructure and investments to attract foreign capital and boost economic growth.
What two choices does the government have in responding to a budget deficit?
There are two options when the government borrows money: pay it off through tax revenue and lower spending, or continue borrowing on your debt.
What does the government do when it runs a deficit?
To pay for a deficit, the federal government borrows money by selling Treasury bonds, bills, and other securities. The national debt is the accumulation of this borrowing along with associated interest owed to the investors who purchased these securities.
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